Kathryn Graddy:
Thankfully, we have a truly impressive Brandeis International Business School alumni working at these institutions. They have very generously agreed to join us today and to share their thoughts. Before I introduce our speakers, I'd like to mention that this event is co-sponsored by the International Business School's Asset Management Council and the Perlmutter Institute for Global Business Leadership.
Kathryn Graddy:
Our sincere thanks go out to the entire Asset Management Council, it's chairman Perry Traquina for all the work they've done in support of the Trends and Asset Management Series. Our sincere gratitude especially goes out to Louis and Barbara Perlmutter, who generously founded the International Business School's Perlmutter Institute for global business leadership.
Kathryn Graddy:
The Perlmutter Institute prepares students for leadership positions in global corporations. The institute also explores the intersection of business, the global economy, government and civil society. Lewis Perlmutter is a Brandeis University graduate and a member of our Board of Trustees. Barbara Perlmutter is a member of our International Business School Board of Advisors. Thank you for your enduring support.
Kathryn Graddy:
Now to introduce our speakers and our moderator. Joining us today are alumni, Andrea Dore, Elida Reci and Olaf Unteroberdoerster. Andrea and Elida are graduates of the International Business School's Master of Arts in International Economics and Finance Program. While Olaf is a graduate of our Master of Science and Finance Program and our PhD Program in International Economics and Finance.
Kathryn Graddy:
Moderating today, we have a special guest, Professor Linda Bui, our Senior Associate Dean. She's standing in for Peter Petrie, whose internet went out this morning. So thank you, Linda, for stepping in at the last minute.
Kathryn Graddy:
Okay, now I'd like to tell you a little bit about our speakers quickly dive into their background. Andrea Dore is the Head of Funding in the Capital Markets and Investments Department of the World Bank. Andrea's current responsibilities include managing the bank's funding program and strategy in several major currency markets and emerging markets. She is responsible for the issuance of the World Bank's benchmark bonds in a wide range of currencies and markets. Additionally, Andrea worked on setting up the infrastructure for the World Bank Green Bond Program. She also managed several projects focused on strengthening the controls and monitoring of operational risk across the World Bank's financing complex.
Kathryn Graddy:
Elida Reci is an economist working for the United Nations Department for Social and Economic Affairs. She is a regular contributor to several UN publications, where she has written on issues related to digital transformation, frontier technologies, innovation, climate change and sustainable development. Elida's work has taken her around the globe, where she has contributed to institutional and regulatory frameworks on sustainable development. Prior to joining the UN, Elida worked as a Senior Economic adviser to the Prime Minister of Albania and is Director of the Albanian Ministry of Finance.
Kathryn Graddy:
Olaf Unteroberdoerster is currently a Division Chief in the International Monetary Fund's Finance Department. The lending capacity of Olaf's areas of responsibility at the IMF total about one trillion. He previously worked on the fund's resources and lending for the benefit of about 70 low income member countries. Prior to joining the finance department, Olaf worked in the IMS Middle East, Asia and Pacific, and Strategy, Policy and Review Departments.
Kathryn Graddy:
Finally, as I mentioned earlier, our moderator is Professor Linda Bui. She is the Senior Associate Dean of the International Business School, and she's standing in for Peter Petrie, the founding dean. Linda Bui does research in environmental economics, industrial organization and public economics. She was a member of the EPA Science Advisory Board Council on the economy wide modeling and environmental justice. She is also a member of the EPA Science Advisory Board Scientific and Technological Achievements Awards Committee. Her current research focuses on the effect of environmental regulation and health outcomes. So Andrea, Elida, Olaf, and Linda, thank you so much for joining us today. I will now offer the floor to our moderator, Professor Bui.
Linda Bui:
Hello, everyone. I am delighted to be here with you this afternoon. I'm particularly excited to be here at this event with our three wonderful guests to discuss, obviously, a set of issues that are incredibly important to all of us and affect us all in very, very different ways. I think that that's really important to give a lot of thought to. So thank you very much Andrea, Olaf, Elida. Thank you for being here with us.
Linda Bui:
So let me start our conversations afternoon by asking each of you to think back about the really surreal months of January, February and March of 2020, and ask you when did you and your institution recognize the scale of this crisis? How did you mobilize to respond to it? So let me start with Andrea.
Andrea Dore:
Thanks, Professor, Linda. Thanks. Good evening, good afternoon to everyone who joined this call. A shout out to my class of '98, I think the best cohort of Brandeis. In response to your question, in terms of when did we really recognize the scale of the crisis, it's interesting. Because on a personal level, I remember sometime in March, when we were told that we would be working from home from now on.
Andrea Dore:
Obviously, we've had the discussion on COVID, we have seen the implications. We were looking on what was happening abroad. But I guess the scale of the crisis, really recognize the scale of the crisis, maybe more around not until say, March, that's when realize the magnitude. In fact, in early March, the World Bank announced the first initial response. At that time, it was 12 billion to assist countries then to address this, the emergency response. By mid March, that number had increased to say $14 billion. But by the end of March, that commitment was expanded to $160 billion.
Andrea Dore:
So you could see, recognizing the magnitude of the crisis, the bank had to set up fairly quickly. There is no sort of trading book, any trading manual for this, fairly because the magnitude of this crisis very quickly, a dedicated COVID Fast Track Facility. What it allowed, at the beginning of April, the first group of projects, the bank was able to roll out funding to the first 25 countries.
Andrea Dore:
That emergency, obviously, like I said, it's nothing that people were expecting that magnitude. The response had to be continued. In fact, the first response reached say probably about 70% of the population. I've been working at the World Bank since I graduated in 1998. I have seen several crisis. I haven't seen the speed and magnitude of this response that we've seen for COVID-19. This has been unprecedented. The bank, fortunately, took fast comprehensive actions that really helped save lives and protect the vulnerable.
Andrea Dore:
In fact, as you mentioned that I had the funding team at the World Bank. Basically, that's the team that responds to the bank in the capital market. A lot of people know that bank for the development work. But we have a huge operation because all the funding that the bank provide to countries, actually even though backed our shareholders in terms of providing equity into the institution, but we raised all this funding in the capital markets. We had to raise an extraordinary amount of funding in a very quick period of time in the capital market. In fact, in April alone, we raised $15 billion in eight days. This include one transaction of 8 billion US dollars. This is the largest one ever issued by a multilateral institution.
Andrea Dore:
Last year alone, we generally raised between 40 to 50 billion. We raised, for IBRD and IDA, the bank raised $80 billion across 20 plus currency globally. This is an unprecedented amount. This is the highest ever in the bank's 75 year plus history. So the crisis, like you mentioned, really recognized the magnitude, but the response, it required a very quick and massive response.
Linda Bui:
That is wonderful. Thank you, Andrea. Olaf, what about the IMF?
Olaf Unteroberdoerster:
Thank you, Linda. Thank you for inviting me for this webinar. It's a great pleasure to be back, even only virtually. I also want to thank you thank Andrea and Elida for joining the panel. I'd like to start the first question a bit more from a personal perspective. I can talk more about the IMF response later on. But when did I realize that this was a big crisis? When did the institution realize that this was a big crisis? I was preparing in early 2020 for a major review of the IMF's reserves and preparing an analysis to be provided to the board on the credit risk that the IMF had been taking prior to this crisis.
Olaf Unteroberdoerster:
I was hearing a bit of background noise on the spread of the virus starting from January. I was also aware that some of my colleagues in the research department were preparing board briefings. But I consider these more distractions, I was really focused on getting my own major policy review ready to be presented to the board. But then I had two staff members who were on leave in China. Suddenly, I became personally involved in evacuating them and getting them back safely to Washington DC. I remember vividly one weekend in early February that I was constantly on a line with one staff member. She managed to get on the last flight of United Airlines from Beijing to Washington.
Olaf Unteroberdoerster:
She managed to get into Washington just hours before the previous administration imposed a travel ban from from China. I realized this is a big one, I have to pay attention to this. The next day, I continued to prepare for this review of reserves. We issued the paper to the board. I began to have background calls with our external relations peoples. Just days before the board meeting, the IMF started working from home.
Olaf Unteroberdoerster:
Initially, it was a trial exercise. I remember we were all sent home Friday, March 13th. Saturday, March 14th, we were told, "This is not just a trial, you will be working from home for the time being." On Monday, March 16, I was continuing to have preparations and press calls on this review. Two hours later, we decided the events will be so important, we cannot continue with a review that pretends this is business as usual. We pulled the board meeting, we pulled all the press releases. Within hours, we focused on fighting the pandemic and more on that later. But it was really impressive to see how quickly we then shifted gears at all levels.
Linda Bui:
Thank you, Olaf. Yes, I think we all have these personal stories about when it really dawned on us that this was the big one. Elida, what about the UN? You're still muted, Elida. There we go.
Elida Reci:
Thank you so much, Linda. It's very lovely to be here back at Brandeis, after almost 18 months together with Andrea and Olaf. Thank you, Dean Kathryn and former Dean Petrie, for making it possible. I can't believe it was actually only 18 months, we were there celebrating our anniversary. A big greeting, joining Andrea, in greeting my classmates whose links to Brandeis do not show that close as ours. But I'm sure in spirit they're always with us and following us whenever they can.
Elida Reci:
What Olaf was saying, it kind of really deeply resonate with many of us, especially the one like the part of the UN that I work is headquarter based, it's secretariat. Much was happening in the field for us to have a response for which you need to build global consensus, not the easiest one. So it came initially through family links. My mother lives in Italy, where I am right now, allowed by my office to work remotely. So Northern Italy start feeling it pretty much, it was the first spot in Europe. So I knew something big was coming. But honestly in the office, we all were carrying our own work. We have a publication that measures the government readiness of all the UN members, we were at very last stages. So we're really running to finish it. But I knew because I couldn't really take the proper sleep, I would kind of stay up to 2:00 at midnight to wait for my mother to know she was doing well and trying to convince my brother to separate and not see her, which was quite unusual.
Elida Reci:
But to go back, the UN, initially, there were parts of the UN, especially the Security Council, the General Assembly, where quite a lot of what's happening in terms of specially least developed countries, raising concern that any stop to the flight and to the trade might highly affect them. They were feeling it in late January, early February. It was until mid March, as Olaf mentioned that we were told, "You need to experiment working three days from home, and then we'll see how it goes." In 75 plus years of the UN, it never happened that you could have something online. It was thought that the last place on earth to go on total shutdown will be the Secretariat. You need the Security Council, you need the General Assembly, it looks like the world cannot function without that.
Elida Reci:
It did in fact function because UN is not just the Secretariat and the part that I happen to work. We're talking about a large organization with over 30 development funds and agency. Sometimes we do include regional institution. I know Olaf, Andrea, you don't love us so much, and sometimes we don't. But in general, we are all part of the global system so to speak.
Elida Reci:
In February, the Secretary General's did recognize getting his briefing, did recognize that we are heading on something that we haven't experienced before. It was the time of the reflection for the UN at the 75th year of its life. We're really looking on how we are going to reshape especially the development segment of the UN. We have seen the first special envoy of the UN on financing for development being appointed for the first time. In a matter of two or three weeks, I'm being called to stop the work on the UNE government survey, because the UN was organizing for the first time in 75 years again, the high level conference on financing during COVID and post COVID. It was an initiative of the Secretary General, the Prime Minister of Canada and the President of Jamaica, which was to be organized by 28th of May last year. That kick started the work on a number of pillars which I will detail later. Thank you.
Linda Bui:
Thank you, Elida. Andrea, over the year, as the shock became clear, can you give us some concrete examples of how countries were affected and how the bank helped? So what innovations emerged in the bank in this period?
Andrea Dore:
Okay. Yeah. In fact, the bank, since the COVID period started, the bank have rolled out programs in more than a hundred developing country. COVID has really dealt a major blow to the poorest countries. The pandemic, what has happened has really compounded the challenges that developing countries are already facing. The unfortunate thing is that the heaviest burden of the pandemic has really fallen on those vulnerable countries. In fact, most of you know, in some of some of the group statistics that we had, even before the crisis, we have 40% of the world population that live on just $1.50 a day. That's over 3 billion people. You have over 9% of the world population that live in extreme poverty, that means living on $1.90 a day.
Andrea Dore:
We are already in a bad situation when you look at from institutions like the UN, the World Bank, IMF, the multilateral institution was working towards the UN development goals and trying to. Then all of a sudden, you have a pandemic like this. The estimate from this, there's an estimate from this that this pandemic will push 150 million additional people into extreme poverty. In fact, my colleagues suggested that extreme poverty worldwide will increase for the first time since 20 years. So the bank have really, in terms of your question, is how have the bank helped during that period.
Andrea Dore:
Apart from I could probably give some more specific examples, the scale of the crisis, the bank had to find creative ways to quickly mobilize and redirect and funding to countries. So countries could access particularly it started first as a health crisis, to access critical health supplies. The bank had to come up with some innovative ideas in terms of helping facilitate procurement on behalf of countries like bank facilitate procurement. What does that mean? What the bank assisted countries in negotiating contracts with supplier and manufacturer, to ensure more equitable access to scarce supplier.
Andrea Dore:
We all remember trying to get mask, trying to get PPE, and how scarce those resources were and trying to help negotiate in the country. We have to avoid price gouging. The bank help countries increase the bandwidth, so that they could continue critical public services, such as healthcare, mobile payment, delivery e-commerce, the bank worked with government, in private sector and other partners, because it's a global to repurpose and accelerate energy operation.
Andrea Dore:
That was important to provide safe, clean, reliable, and affordable energy to be able to connect hospitals and other critical facilities, testing laboratories, cold storage for vaccine. So there are a lot of areas that the bank really helped to try to scale up say the social safety network. I'm from an island in the Caribbean called St. Lucia. We're not fortunate in the develop countries that have that social network, where government could just send out checks. That might work very closely. Like some examples, I can probably give you a few examples, say for instance, in Pakistan, the bank provided $25 million in emergency cash transfer.
Andrea Dore:
This went to about four million people under some national safety net, assisting in providing food for the poor. The bank worked with countries like Malawi to provide support when it comes to home-based school. That was a challenge, people were not set up. Even the international institution, we weren't even set up at home to trad. We were scrambling. So you could imagine those countries that don't have facilities. Kids don't have laptops, they don't have those digital devices that we have. In Turkey, the bank provided help in terms of schooling. They will provide help in the countries in terms of different channels, through television, internet radio. So there are so many examples where the bank had to step up it operations. There are countries, like I said, at the beginning, it seems like a health crisis. Coming from St. Lucia that really depends on tourism, and you have all of a sudden, all the borders are shut. It's estimated that GDP in the island will shrink by 20%.
Andrea Dore:
So the bank had to step up. St. Lucia was also one of the beneficiary in terms of helping, in terms of some of the social safety net. So these are just a few examples of some of the things that bank, but like I said, we could probably go on and on and on. But I think that's some past account here.
Linda Bui:
So I think there are lots of dimensions of what could really be some of the issues that come up. So in terms of ramping up, Olaf, what needs did the Fund identify? How did it adjust or invent new programs and have the the scale and the speed of interventions to meet the needs? Do you think that your innovations are going to have value in the future? Which I think is a really important question.
Olaf Unteroberdoerster:
Thanks, Linda. Yes, the Fund's lending is generally considered very flexible. The Fund basically just has two facilities, one for short term VOP needs and one for longer term VOP needs. But we realized quite quickly that we needed to change a few things and we needed to do this quickly. So the Fund looked at a tool that it had not used a lot in the past, and that was a rapid financing instrument, which is a tool that addresses urgent VOP needs with essentially very little conditionality. The interesting thing here is that we changed policies, while at the same time, we were already accepting requests and inquiries for assistance. Usually it can take a long time to change your policy. After it has changed, countries may request assistance under this policy. What was new here is we did this on parallel tracks at the same time.
Olaf Unteroberdoerster:
So we looked at this emergency financing facility, increased access levels to this facility, and we streamlined approval procedures. I remember that we brought all these policy changes to the board. The board decided on those, approved those in a very short period. Literally the next day, the board got the first requests from countries for financing under this emergency facility for approval. In the end, we within a few months, since the onset of the pandemic, we provided assistance under this emergency facility to 85 countries for a total of over $110 billion. Just by comparison, before the crisis, we would maybe have three or four countries in any given year under this facility. It was increased many fold.
Olaf Unteroberdoerster:
Also many low income countries benefited under this facility, 51 low income countries benefited. The capacity for subsidized lending with zero interest rates under this facility was increased five fold within a short period. We also adopted a completely new facility, the short term liquidity line, which was a precautionary facility for emerging markets and advanced economies with strong institutions. It's basically a precautionary credit line. This facility was discussed within the IMF and at the board over years, repeatedly. Only in this crisis, finally, there was sufficient support and a view in the membership. Yes, we also need this, and we want this now. It was adopted in a very short period of time. Fortunately, and thanks to the massive interventions by leading central banks, the ECB and the Fed, global financial conditions eased relatively quickly, beginning in April and May. So this facility remained in the toolbox but was not used.
Olaf Unteroberdoerster:
So I think what happened here in the first phase was really a round about tackling of policy issues and also operational issues to really get the money flowing to countries that needed it. There was a widespread need. Then a few months later over the summer, we also started work on revamping the toolkit on a longer term basis. We started thinking about what would be the phases of the pandemic, the stabilization phase, the recovery phase, and addressing long term structural needs. Work began on a pandemic facility that would have allowed for much longer repayment terms, addressing long term structural needs, something that the IMF had never done before.
Olaf Unteroberdoerster:
I have to say that those discussions are still ongoing. So far, there has been insufficient support for these reforms. But I think the work was still worthwhile because as we are gradually coming out of this pandemic, the focus is now shifting to the longer term challenges that pre existed the COVID pandemic. In particular, climate change and supporting countries for climate climate adaptation. So the work that has gone into these facilities might well become relevant again as we address those issues.
Linda Bui:
Thank you, Olaf. That's actually going to bring up a question that if we have time later on, I will ask you about. Elida, the UN's role is more to mobilize governments to act rather than to offer direct support. What do you think are the most important accomplishments in 2020? Where do you think the UN came up short? You're muted still, Elida. Thank you.
Elida Reci:
Thanks for the question, Linda, it's quite important to mention that once again, we have this coordinating role. We are practically from the global to the country level, through our UN country offices. So the UN response was not only a sectoral, multi sectoral, multi layeral, but it was from the global to the national level as well. What we had, UN at that point in time was working on what was called a system wide approaches to the future of health, to the future of education, to the future of work, to the future of food.
Elida Reci:
All of those were somehow taken into consideration. One will be from the 2019, 2020 and onward in terms of what we are now experiencing in about one year time. So it was in a way, being mobilized through the same teams in multi UN agencies approaches to address very critical issues. So far, we have helped 155 million children, ensuring that they continue their education. They are 1.9 million community health workers that have been through the UN entities that have received training and are now in the first line of response. We have deployed over 100 emergency teams in over 90 countries. We have helped 20 million people to ensure access to water and hygiene.
Elida Reci:
Those are very few numbers, if you will, because as I mentioned, it's somehow difficult to have the update on the contribution of the UN entities at all levels. I would like to just say that thanks to the cooperation with Bretton Woods Institution. As mentioned by Andrea and Olaf, countries have been able to ensure access to internet, to get some support to the health system, and to ensure that the food delivery was there somehow, the humanitarian help was there, and that for our UN system extend to the refugee camps etc.
Elida Reci:
So if I would sum up the UN response somehow, I would say that it was a health response, which the benefits of home, we all have seen despite quite critical standing has been led by WHO. It was the peace operation that has been led by security council resuming the work very quickly through the online by ensuring at the same time, the needed level of security. Humanitarian response and the one that I'm more familiar, because my office is in charge within the UN Secretariat, is the framework for immediate social and economic response.
Elida Reci:
I would like to highlight what Andrea mentioned, that we're talking about 1200 people dying not out of COVID, but out of hunger. ILO is estimating that we'll about over 500 million jobs, lost only in 2020. So we're talking about widening economic inequalities to a level we haven't seen it before. The reference initially March-April was made to the levels of 1998. But we are way past that level. We're still looking for a reference to which to show because the numbers are coming.
Elida Reci:
It is clear that we need quite a lot of funding, which somehow gets estimated in the trillion rather than billions. What we need to make sure is that we have that political leadership in there to allow for this global response to get into place. that's what my office has been doing somehow, supporting the Secretary General's effort in ensuring that the political leadership is there. We have seen how critical such is. So what what started in May 2020 was just pressing, discussing on six pressing issues. The first one is the need to expand liquidity in the global economy and maintain financial stability to safeguard development gains, if any, and strengthen the recovery for current and future generation. So that is something that we have started last year, it's going to continue in the years to come. There is a need to address that vulnerabilities.
Elida Reci:
That has been led by the IMF with over 20 other UN entities collaborating on this matter, to ensure that all developing countries in need are taking full benefit of the current debt instruments that are managed by both Bank and the IMF, but also the introduction of the new instrument and replenishing it. Along with that, there has been highly expressed need by the least developing countries. But along with them, also the middle income countries in renegotiating the terms of debt. Those are still discussion ongoing, the instruments and modalities are still subject of discussions. But again, that is highly needed to support the funding needed for immediate and short term response.
Elida Reci:
There is a need to create, as I mentioned, a space for private sector creditors. So they can be engaged in effective and timely solution. In order to avoid a disorderly wave of defaults, the prerequisite for enhancing external finance for inclusive growth, gender equality, creating jobs, those seems to have been more of long term financing. But now they are at the forefront, especially lowering the transaction costs for migrant remittances, which has been critical for over 90 countries, UN members in different levels of development.
Elida Reci:
The fifth one was measures to expand fiscal space and foster domestic resource mobilization by preventing any such financial flow, based erosion profit shifting and facilitating contribution of the digital economy, which I've seen how critical it has been in the past year. The sixth one, where that somehow gets also threaded into all the first five is the green recovery. Ensuring that whatever we do from now on, it's a great opportunity to do it in a sustainable and inclusive way, by aligning policies not only with sustainable development goals, but with Paris Agreement and Sendai Framework on disaster risk reduction
Elida Reci:
I hope I'm not taking much time, in terms of the timeline, that meeting that took place in May was followed by the meeting of September of the Ministers of Finance, the first time that they came to the UN Secretariat. Usually as we know, they go for spring and fall meetings only in DC. The other one was the meeting of heads of state, ensuring that the president and the prime ministers are fully aware and committed to whatever technical teams and political teams are there.
Elida Reci:
That led to kickstart of what we know now as COVAX, which is the instrumental partnership in ensuring that the vaccine are distributed to the countries around the world through the pledges and the donation given by not only the government of the developed countries, but also the private sector and the foundations. I have much more to stay, but I'm stopping it.
Linda Bui:
Well, I do you want to save some time for our questions than answers. So let me ask the three of you the following. We're not done with COVID yet. We would like to be, but we're not. So very briefly, what grade would you give to the international system for its response so far? Maybe more importantly, COVID was just a shot across the bow. This is not going to be the first pandemic that we could face possibly in our lifetime. Are we ready for the next crisis? I mean, something that is very clear from all of your responses is that the World Bank, the UN, the IMF, you all responded very, very rapidly in ways that we hadn't seen before. Countries are going to expect that same response rate perhaps even during non pandemics, non crises. Are we ready for the next one? Andrea, would you like to start with that one?
Andrea Dore:
What grade would I give? I guess the initial response, like I said, I have been in the bank for two decades now, and I haven't seen that level, that mobilization, that quick massive scale of response. So on that basis, I believe that those institution of the World Bank does deserve a high grade for the initial response. What's a high grade? I guess the European high grade might be very different to the US grade.
Andrea Dore:
But I think we're only able to provide a final grade, because the goal is to really ... While it seems like a short term crisis, but it's not, because it has long term implication. So we need to see how some of the policies that have been rolled out in these countries, and how we could sort of build back better and greener. Are we ready for the next crisis?
Andrea Dore:
While we could never be fully prepared for the next crisis, it could be very different. But I do believe that the experience that we have gained, whether it's through the financial crisis, through Ebola and now COVID, will definitely help us in terms of dealing with the next crisis. One thing we've learned, at least with COVID, that we require solutions that are scalable to deal with the crisis, the magnitude of the crisis, solutions that promote resilience and opportunity for the people that are impacted the most, which are the poor people.
Andrea Dore:
This crisis will put families back by decades. So we need a recovery that will deliver growth, it's robust, it's inclusive, and something that's sustainable. We always hear the phrase, "Building back better and greener." And even though I'm talking about climate change, this is not just a phrase because it's very important, particularly climate change, bring it into discussion. Because poverty, food security, all of those things are exacerbated because of climate change.
Linda Bui:
Absolutely right.
Andrea Dore:
Yeah. So we cannot ignore those changes. So I think our response needs to be multi dimensional. So I really think that the tools that we learn from this crisis would prepare us for the next crisis.
Linda Bui:
So before I have Olaf respond, I've been asked to let the audience know if you have any questions, please put them in the question and answer box for us. We'll just keep our responses pretty short. So we can save a little bit of time for those questions that have come up. So, Olaf, please. What do you think?
Olaf Unteroberdoerster:
Yes, thanks, Linda. I don't want to give this response a grade. But I would start by saying it wasn't perfect. It wasn't perfect. But I would also like to say, let's remember where we were coming from. Organizations like the International Monetary Fund can only be as strong and as effective as the membership wants them to be. On early 2020, multilateralism and international organizations were pretty much under attack in this country and elsewhere, nationalism was on the rise.
Olaf Unteroberdoerster:
Against this backdrop, to see this response and also to see how the membership came together and worked through these organizations to address this global pandemic, was a very encouraging thing to see. In the end, I mean, up to now again for the IMF, we have made commitments of nearly $300 billion dollars so far. That is a good chunk of the IMF's total lending capacity of a trillion dollars. Clearly, we can do more. Just maybe to give you an idea of what we can do more, just yesterday, we had a board meeting and executive directors expressed strong support for a plan and asked the IMF staff to make a specific proposal to allocate the IMF's special drawing rights to the membership.
Olaf Unteroberdoerster:
This is a tool that only the IMF has. It's a used very rarely. The last time a general allocation of reserve assets in the form of SDRs was done after the global financial crisis. After a year of debate, it seems that there is now a willingness to consider a formal proposal by staff for another general allocation, which could be to the tune of $650 billion, and which would provide immediate relief to many of the poorest and many of the liquidity constrained countries in the world.
Olaf Unteroberdoerster:
So not a perfect response. But we are also not over this crisis yet, we can do more. I'm quite optimistic that we will, in the end, do more. I also believe that if there's one lesson from this pandemic, you ask, are we ready for the next crisis? I think the one lesson is that nobody should believe that these types of crises, and there will be more like these in the future, that these global challenges can be tackled without international organizations, without the UN, the World Bank or the IMF.
Linda Bui:
Thank you. I'm actually going to go on to some of the questions because we're going to run out of time. The first question for the audience is the following. What steps are the UN, the World Bank and the IMF taking to better prepare themselves for future such widespread viruses or disease? Elida, I'd like you to try and respond to that one first.
Elida Reci:
Yes, thank you, Linda. I think the UN financing response to the crisis and beyond has seen multi-layer, multi-plan encompassing responses that are prepared through a multitude of high level and ongoing pledges and financial commitment. However, COVID-19 pandemic is more than a health crisis. It's an economic crisis, humanitarian crisis, security crisis and human rights crisis. The crisis has highlighted severe fragilities and inequalities within and among nations. Coming out of this crisis will require a whole of government, a whole of society, and the whole of the world approached, driven by compassion and solidarity.
Elida Reci:
We at the UN, while we are carrying daily work in delivering a global response that leaves no one behind, starting with distribution of the vaccine, we're trying at the same time to work on reducing our vulnerability to future pandemics. That comes by strengthening our institutions and their capacities to respond to such crisis. We've noticed that leaving the WHO underfunded had a critical impact to the UN capacity to respond to this crisis.
Elida Reci:
But at the same time, we realized that adopting a whole of a system approach in which multiple agency collaboration was needed made us overcome these obstacles. So we'll work much more on that. We do understand that we also need to build resilience for future shocks, and especially as it was highlighted by Andrea on climate change. We need to work and look at the challenges that we have ahead, not only as health crisis again, but with a very strong emphasize on the other crisis and with the threat of climate change in all of them. Only in this way, you will be able to somehow overcome the severe and systematic inequalities that were exposed by this pandemic.
Linda Bui:
Thank you, Elida. I have another question from the audience. It says, "I don't trust the leadership in many of these countries. How can we get comfortable in the future of future payments getting to their intended humanitarian uses?" Andrea, would you like to give a shot at that one?
Andrea Dore:
Yeah. The question of whether it's transparency, debt transparency. I know the UN, IMF and World Bank have been working a lot on that, making sure in the countries that the money is used for the purposes intended. One of the things that the bank head offices, although our headquarters is in Washington, have offices in over 100 countries to be able to be on the ground, to have direct dialogue with the country. There will always be those challenges. There's no doubt there will be challenges. Maybe with the emergence of this big FinTech and emerging technologies and blockchain and whether we'll be able to use Use some of those emerging technologies to be able to track and trace payments and make sure it get to the intended. But I think a lot of work in terms of transparency, a lot of what has been done over the decades, a crisis makes it more difficult because you have quick response, quick tracking. But I do believe that the bank will continue to work under multilateral institutions as well.
Linda Bui:
Thank you, Andrea. I have a question. We know, as I said, that this is not going to be the first one. You mentioned that we don't have a training book. We have three minutes left. So I wanted to ask the following. Do we now have a training book? Do we now have, in each of your institutions, something set up? So that you know what to do, you know what steps to take when the next big thing hits? Olaf, do you want to give that one a shot? You've got three minutes.
Olaf Unteroberdoerster:
I would like to give some space also to Andrea and Elida. But I think for the IMF, this is maybe relatively easy to answer. Because the IMF is essentially a firefighting institution at the center of the global financial safety net. The IMF was designed to address economic and financial crisis. While this is a health crisis in the first instance, it is also an economic and financial crisis. That's where the IMF came in.
Olaf Unteroberdoerster:
I mean, when I joined in 98, it was at the height of the Asian Financial Crisis. Then we went through a tranquil period, then we had the global financial crisis. We saw that this is a once in a lifetime event. Then I was personally involved in setting up a trust fund for catastrophe containment, and that was in the wake of the Ebola crisis in Africa that didn't make such big headlines in the world. But it was still an important crisis. The tools we developed there have also helped us now, Elida has already mentioned the debt suspension service initiative. This trust is also helping in this area.
Olaf Unteroberdoerster:
Now we have the pandemic, we will have future crisis. We will probably have to deal also this more regional crisis. There's natural disasters, there's climate related events that have a bearing on the economy and financial systems. We will, in general, always be ready as IMF to fight this crisis. But again, I think in the big scheme of things, for universal, multilateral organizations like ours, what is important is that there is a common purpose, that there are shared values. That the member countries realize that there are things, that there are global challenges that can only be tackled jointly, and that nationalism and country first strategies are a dead end in this world.
Linda Bui:
Olaf, thank you. I would like to thank all three of our panelists today for a fabulous conversation. We've learned a lot. I am incredibly grateful that you're all where you are, doing the good work that you are on behalf of all of us. Now I would like to turn over our discussion to Dean Graddy.
Kathryn Graddy:
Thanks to all of you for a very enlightening discussion about about this topic, which is an extremely important topic. Andrea, Elida and Olaf, thank you for joining us today. Your expertise is invaluable and your professional success is a shining example for all of our students and alumni at Brandeis International Business School. So thank you. To our moderator, Professor Bui, thank you so much for leading today's conversation, for your leadership, and for your continued efforts to advance our mission at the International Business School. It's great working with you.
Kathryn Graddy:
We have one more event to tell you about in this year's Trends and Asset Management series. On April 14th at noon, we will be hosting a timely panel on environmental investing featuring several leaders in the field. This event will be moderated by Brandeis alumnus and Asset Management Council member Rob Brown. This event is part of our Business of Climate Change initiative and will be co-presented by the Rosenberg Institute for Global Finance. Finally, all of you will soon receive an email asking you what you thought about today's event. Please take the time to share your thoughts with us as we plan for the future.
Kathryn Graddy:
Next week, a recording of today's session will be available online at our Trends Asset Management website. The URL will be included in the chat. Thank you again for supporting Brandeis, and I hope to see you soon. Have a great day to everyone.