Published Date: 20 October 2020

"Resilience in Crisis, Trends Beyond COVID-19” – Transcript of “In-Conversation” with Mr Ravi Menon, Managing Director, Monetary Authority of Singapore, at the Webinar with Tim Adams, President, Institute of International Finance, IIF Annual Membership Meeting 2020 on 12 October 2020


Tim Adams: Good morning to those of you in the United States and late morning in Europe, and good evening to all of you in Asia. Good evening to my dear friend, Ravi Menon, from the Monetary Authority of Singapore. Thank you for joining us. You look great. You seem healthy, happy; and everything is going well in Singapore?

Ravi Menon: Well, not too bad actually. Good to see you again, Tim. It's great that the IIF is doing this over five days. A demonstration that life goes on, discussions go on and exchanges continue to take place.

Tim Adams: I was reading some of your speeches and I saw a great quote you used from Rocky Balboa. I hope everyone knows who Rocky Balboa is, and you said, “It ain’t about how hard you hit, it is about how hard you can get hit, and keep moving forward.” The topic was resilience. So how resilient is Singapore during this crisis - how have you been functioning?

Ravi Menon: Well, it has been a real test of resilience. I don't think any country can immunise itself to what's happening around us. The pandemic has really spread across. So resilience is not a question of trying to hold it at the borders, but how do you cope with it? And how do you cope not just with a pandemic, but with the economic consequences of the measures put in place to address the pandemic - safe distancing, lockdowns, and such. While most activities have come back, some remain restricted. So it's really a question of: “you’ve taken the punch, how are you bouncing back?”

The first is economic resilience, and it helps to have very healthy public finances. Singapore is able to spend a fiscal stimulus of about 12% of GDP, without raising taxes and without borrowing. That is because we have accumulated surpluses or reserves. To use the reserves, the Constitution requires the Government to seek the President's approval - a case was made, and the President approved it because this was an emergency.

The deficit this year is larger than the accumulated surpluses for the last ten years or so. But that's a sign of resilience - fiscal resilience.

Next, financial system resilience. Under the circumstances I couldn't have asked for more, going into the crisis from a position of strength in the financial industry. Not unique to Singapore, I think for many other countries - thanks to the financial and regulatory reforms over the last ten years - the banking systems are well capitalised, highly liquid, have low levels of leverage and much stronger risk management. And this time, to the extent that finance can be part of the solution, I'm happy that the banks have been able to continue extending credit to the economy at this very critical period.

Then the resilience that comes with technology and digitalisation. I was just telling you, Tim, that if this pandemic had hit Singapore or for that matter any of our countries ten years ago, when digitalisation was nowhere near the levels we see today, life would have been a lot more difficult. There would have been a lot more hardship. But today, by and large, life carries on.

And resilience in jobs. The extent to which digitalisation has saved jobs has been just incredible.

Tim Adams: It's a great speech, and we're going to hit some of these resilience themes. You hit on the issue of the post-crisis, the great financial crisis reforms put in place, and more capital and liquidity, and less leverage. So we just had the most extensive stress test ever, over the past eight months, which we're still experiencing. We're obviously going through lessons learned. What lessons have you learned in this process - what worked or didn't work? How do you see it from your vantage point?

Ravi Menon: Well, when faced with a crisis, I think it was good that regulators saw the situation for what it was, and allowed, encouraged and nudged financial institutions to dip into their buffers. Buffers are built up during good times precisely for this reason, so that they can be drawn down during bad times. And to the extent you have built up a lot more than the minimum requirements, it makes it easier to draw them down to support the economy.

But when the crisis is prolonged, then what happens? Because the buffers do get depleted and long before they get depleted, you got to start acting. Conserve capital, that's one, and many regulators have required banks to do that. It is a form of burden sharing when you hold back dividends, and investors share some of that burden that is on the banks now, to support the economy.

But going beyond that, what I've not heard much but I think people are beginning to talk about, is whether you need to raise new capital. It's not going to be easy at a time like this. But if you're going into 2021 with the economy still not back to pre-crisis levels, that means the need for support for the economy through the banking system is still very relevant. Yet, you're not sure how many loans have gone bad because of all the moratoriums, reliefs, fiscal support, and furlough programmes. And when all that support starts receding as they are beginning to, in many parts of the world including Singapore, then you'll get a sense as to which are the really good credits. And non-performing loans will rise.

We've not seen the full extent of the crisis. I think we have seen the worst of the GDP downswing. The corporate bankruptcies, unemployment, and non-performing loans are probably going to start rising over the next few months into 2021. That would be the real test of the resilience of the financial system.

Tim Adams: I see from the headlines from Bloomberg this morning, that says that MAS extends facility for SME lending by banks and finance companies. So, you're extending some of the facilities you put in place in response to the pandemic.

Ravi Menon: Yes, we have a variety of liquidity facilities. Like most central banks, we have the overnight facilities. And of course, thanks to the swap line with the US Federal Reserve Bank, we have the US Dollar window for US$60 billion. That’s been tremendously useful in providing US Dollar funding. And of course, our own Singapore Dollar funding.

But beyond that, MAS introduced low cost funding at virtually 0%. We offer 0.1% loans to banks, over a two-year tenure for onlending to small and medium enterprises. What we've avoided doing is to directly lend to the economy. We still think that the banks are well-placed to make that judgement as to who are the worthwhile credits, but what we have done is to reduce the cost of funding to extremely low levels.

The government also stepped in to share the risk on those loans - 90% of the loss is borne by the government and the central bank provides 0.1% funding. Then it's up to the banks to decide: do I want to lend to this customer, given the low cost of funding and that 90 cents to the dollar is being borne by the government? But that remaining 10 cents to the dollar is skin in the game for the banks and they have been prudent. They have lent to parties who they might not have lent to in business-as-usual conditions, but they have been also quite circumspect and prudent, and that's the basis on which we have extended the funding. It doesn't cost us very much, but it helps the banks during a time like this to make those credit decisions.

Tim Adams: One of the tensions that we have in the US and Europe and other places, is continuing providing historic levels of monetary accommodation to keep the economy going.

The question is, how long do you do that? Do you create bubbles along the way in certain sectors because there's a hunt for yield? At what point do you have to start dialling back support, lest you create zombie companies and no longer have creative destruction? I know there're lives and jobs associated with that, but at certain point, there will be sectors that are permanently damaged, and you need to reprice those assets to get them back in the marketplace. The tension between going through a bankruptcy processing and the creative destruction, versus how long do we keep this process going - how do you balance those two?

Ravi Menon: That’s a very important question. It is something all of us are grappling with. We are keenly aware of the risks of prolonged support, but also of the risks of withdrawing support prematurely.

The key thing here is not to maintain the levels of crisis-level support; but to start tapering, to start pivoting and to start targeting that assistance. Not to pull the rug out too suddenly, but to start getting into a glide path towards normalcy. So in Singapore, that's been done on the fiscal side with respect to the job support programmes. The percentage of salaries that is being subsidised by the government has come down sharply.

For the credit relief measures offered by the banks which was facilitated by MAS, there will no longer be full moratoriums from January next year. Some principal has to be repaid - like 20% - because that's an important signal that you're on the mend. It also helps you to discern who are likely to make it and who are not likely to make it. So whether it is individual or a small medium enterprise, insisting on some repayment is a necessary part of the adjustment process. But you can't expect to have full repayment or regular repayments as before. So, it's a matter of tapering down the relief.

The tapering has to keep pace with the degree to which you're opening up the economy. Because as you open up the economy, you are creating opportunities. And you would expect businesses to start getting revenue, start servicing their loans, and start paying more of their workers’ salaries on their own rather than depend on the government. As the economy fully opens up, then you can start withdrawing. You have to watch to what extent you have opened up the economy, and that in turn is related to the risk posed by COVID-19. The tricky part for most governments would be, what do you do about industries like aviation? Most other industries are beginning to recover slowly, which means you can reduce the level of support. Some will go under, but that's part of the creative destruction that you just mentioned.

But you have some activities, where restrictions are still very strong: aviation and tourism are the two tricky ones, where any withdrawal of support is going to create huge hardship. Yet, how long are you going to be able to provide this support? And to your question, this is not the kind of situation that monetary policy can help very much because interest rates are set across the economy. Fiscal policy is more targeted. In Singapore’s case, we are continuing to extend more support to aviation, tourism and travel-related sectors which remain quite depressed. But, by and large, we are able to start withdrawing stimulus and support from sectors of the economy that are functioning more normally, since most activities have started to open up.

Tim Adams: And I did see that Singapore Airlines offers dinner on an A380. You can drive out to the airport and get on a plane that doesn't go anywhere, and you can have a wonderful dinner. So I guess that's one way of trying to support your fixed costs.


Tim Adams: You know, the great thing about Singapore is that you have been a world leader in transitioning to a knowledge economy. You've got pharmaceuticals and logistics, and you are sort of the poster child for the 21st Century economy. But despite that, are you seeing structural shifts? I was talking to some of our Nordic bankers a few days ago and asked a really hard question which is, are we seeing globalisation shift, are we seeing supply chain shift, or is it just a lot of talk? So here at the epicentre of supply chains and trade, what are you seeing from your vantage point, with respect to shifts and types of structural changes that are occurring?

Ravi Menon: There's been a lot of talk about supply chains. I think it's quite clear there will be a rebalancing towards a greater emphasis on resilience, away from pure efficiency. Supply chains have traditionally been largely determined by efficiency considerations. But we're now moving away from just-in-time to just-in-case.

Resilience doesn't necessarily mean shortening supply chains or inshoring. That's not the smart way of building resilience, because inshoring has its own risks. What we're beginning to see - but I should add that it's still early days - is supply chains to some extent shortening, but more importantly, becoming more nimble and flexible. Can you shift your source of supply within a week or a few days; have you organised your freight carriers, your logistics, in a way you can shift very quickly? So nimbleness is now an important part of supply chain resilience. Duplication and diversification to multiple sources, so that if one geography is immunised, you have access to other sources. In the investment business, diversification is the first principle of resilience, and I think you're going to see that in supply chains - more diverse, more flexible, more nimble, and to some extent shorter, but not necessarily inshoring always. That is the right balance because efficiency is still important. And of course, you will have technology stepping in. Whenever there's a trade-off, technology steps in to make it easier; to make it win-win and to have both efficiency and resilience. And that's a challenge: how you organise supply chains through the use of technology.

More broadly on the structural changes, I would say that the future of work, the future of the workplace, and the future of the workforce are changing.

The future of work was already about digitalisation and the digital economy pre-COVID. That trend has been given a boost by what's happened. More importantly, what the pandemic has caused is a drive towards end-to-end solutioning - you can't just have e-payments without e-invoicing, and you can't just have e-payments and e-invoicing without an online ordering system. So, we're seeing many different digital solutions and applications coming together to provide end-to-end services. We're going to see more end-to-end digitalisation in supply chains too, say trade financing, customs clearance, and so on. The whole chain of events that take place in a trading transaction is increasingly becoming digitalised.

The changes in the future of the workplace are new. Many of us are working from home or remote working, working from outside the office. And surveys across the world show that people like it, especially young people. MAS just had a virtual meeting of its international advisory panel comprising global bank and insurance CEOs and they said most of their young staff prefer to work from home. They have vacated their expensive apartments in New York and London, gone to the suburbs or countryside and are bunking with their parents. They're very happy and they don't want to come back to the high cost of living in the city.

Yet we all know that remote working is not the way you build a cohesive, strong organisation. There will be a loss, coming from the lack of face-to-face interactions. In a sense, we're living on past capital - the teamwork and relationships we have forged. But this state of affairs cannot go on for too long. So there's a lot of attention and thinking now on how you organise the workplace of the future, which involves a higher degree of telecommuting or working from home than during pre-COVID. But you also need to be present at the office to serve certain kinds of clients and customers who need that face-to-face interaction; and within the organisation to build strong teams to brainstorm, to innovate, to create new things. This is the kind of interaction which we can’t get over Zoom. So I think this hybrid way of working is going to be quite an important feature, and many leading organisations are applying their minds to see how this is going to organise this better. The workplace is going to change quite a bit.

Finally, the future of the workforce. Because the future of work is going to be more digital, and the future workplace is going to be more decentralised with hybrid models of working, that's going to require quite a different set of skills from workers. In the financial industry, the workforce has to come up to speed with respect to these kinds of changes.

The proverbial bank teller, for instance. Many people have stopped going to branches. There used to be a sizable segment in most countries, including Singapore, of about 20% to 30% of bank customers who would go to the branches while the rest have largely gone digital with internet banking. But with COVID-19, this group couldn't go to the branches anymore and they've been forced to go online. We surveyed them, and most of them said that after the pandemic, they're not going to go back to the branches because they've gotten used to online banking which they have resisted for so long. So a whole range of financial services are going to go online, which means you need to then provide better value for a face-to-face transaction. And that is where we need to raise the game. The bank teller has to become a digital ambassador who uses digital technologies to guide you and provide you advice on how you manage your money and so on. A much higher order of skills and level of service is required. The future workforce is going to be quite different, especially in financial services.

Tim Adams: I guess the broader question is, I agree with the transition but how much scarring is there in the economy? How does it affect productivity? You know, you talked about a pretty seamless transition for bank tellers but obviously there are portions of our workforce, more so in the US than Singapore, that the transition was difficult even before the COVID-19 crisis. I can't imagine how it now manifests itself. So how do you think about productivity in the short, but more importantly, over the medium to long term?

Ravi Menon: I've been thinking hard about that and because there are so many forces acting in different directions on productivity, it’s quite hard to tell. The scarring of the economy is, however, going to be quite real.

While I've emphasised the digitalisation and the digital skills that people need to pick up, it's also clear that many jobs and many activities which played an intermediary role are going to find it very hard to survive, long after the pandemic is over. Travel agencies, for instance. You can do so many more things now directly online.

Aviation worries me. You know it has to come back eventually because we all suffer from wanderlust. We all want to travel again, and we will. But we won't be doing so for quite a long while. Then the question is, so what is going to happen to that industry when the planes haven't flown, the pilots haven't flown for months on a stretch, going into maybe two or three years? Some of the projections are that aviation is not going to come back till 2024. For activities like these, I think you have a real risk of scarring. Capabilities are lost. It's not like picking up after taking two months off; when you take two years off, it's totally different: investments are delayed. Several sectors in the economy are going to face that kind of situation. I would say about 10% to 20% of the economy is probably going to face some deep scarring from which it may not recover to previous strength: that percentage will vary across countries. And a big chunk of the rest of the economy may not go back to underlying pre-crisis potential for quite an extended period of time.

And then there's going to be, of course, a part of the economy that's going to do even better than before. Information communications and technology-related services will probably do a lot better.

The other growth area is likely to be sustainability. This is not directly related to COVID-19. The pandemic was not exactly caused by climate change. But, in a funny sort of way, the pandemic has made us all a lot more sensitive and aware of how vulnerable we are to the forces of nature. Many people I've been speaking to in the last many months, when they look at the future, sustainability keeps coming up. There's greater consciousness about it and that more needs to be done on that front. This is about remaking many parts of the economy, and which is why we have this refrain about “building back better” and “building back greener”. Not entirely a cliché. I think there's quite a lot of conviction behind it in both the public sector and the private sector. And that will be a new source of growth. I just don't know how strong it will be.

And, coming back to what I said earlier, there are offsetting forces on productivity – there's going to be a permanent loss in productivity in the deeply scarred 10% to 20% of the economy. And then, there's going to be productivity gains and other new areas, such as digital and sustainability. But how pervasive they're going to be, is not clear. So on balance, it's an uncertain future. But that question is key because that’s going to determine median wages and average incomes across the economy.

Tim Adams: Thank you. You have generated lots of questions. Are there specific policy proposals that you think would be important to speed up this transition with an eye toward productivity? How do you manage this scarring? Investment in human capital, I assume. But are there other things, maybe in financial intermediation, that you would recognise and therefore advocate for?

Ravi Menon: One of the things I mentioned about the last time we spoke, is digital and data connectivity. To make the productivity gains greater than they have been so far, we need to have better harmonisation of protocols and standards in the digital economy.

Basically, we need to remake the world that was forged after Bretton Woods, when the WTO and IMF set the rules of the game for international trade and international finance. We've not set the rules of the game for international digital flows and international e-commerce. Unfortunately, some of the current tensions between the US and China are precisely over these rules and norms. Because we don't have rules of the game, there is not enough trust in digital transactions. There is not enough confidence that data is secured, that data is confidential.

This is going to be one of the big, important tasks for the global community - the private sector and the public sector coming together to set these rules. The way the rules were set for trading goods, and subsequently services with GATS, and then the WTO - as to what is allowed, what is not allowed, recourse to dispute settlement, and so on. We need to write those rule books. Small efforts are being made bilaterally between countries. Singapore has been doing some of that, including with the US, in a limited way. I'm hopeful that over time, these can be broadened with more concerted leadership in the global community especially among the big powers and corral everyone together on this.

The other area where we need collective action is on the sustainability front. If we are going to make a difference, this has to be more coordinated. COVID-19 has shown us that if the world had been more coordinated and taken actions in a mutually reinforcing way, we could have dealt with it better. Not that we have done too badly; there has been quite a lot of cooperation, and now countries are talking about travel and testing protocols so that there's mutual recognition to allow safe travel. We need more of that to bring the world closer again to restore globalisation.

For the climate challenge, we need greater consistency in what is green - what is defined as green and how do we support what is green. So again, standards, protocols and norms, these need to be established. We did a great job after the Second World War, doing all of this on a wide variety of fronts. We need to re-do that for the new world that's emerging.

Tim Adams: I completely agree with you, and I've had multiple conversations about the challenges of data localisation, and if there is a continued push on decoupling and what that means for technology.

The second issue you brought up is a hugely important one to us here at the IIF and that's sustainability. We've been working with you and others in Asia, and our European member firms, in the last couple years. Depending on the election here on November 3, we could see a real acceleration of climate-related policies in the US. I think 2021 may be the most exciting and consequential year of our lives with respect to sustainability.

All the things you just talked about on how do you build all the taxonomy and all the basics of data, you obviously have been a leader in this area. How are you at the MAS thinking about ESG generally, about sustainability generally and climate specifically? What's on your to-do list?

Ravi Menon: Well, sustainability is our biggest to-do list. In fact, I'll be talking about this tomorrow - about MAS’ green finance action plan.

The first thing we need to do is to understand the vulnerability of the financial system to environmental risks. This is something we need to urgently pay attention to. There are two kinds of risks.

Physical risks arising from climate change itself – floods, rising sea levels. This is going to lead to more insurance claims, revaluation of loans and investments. Financial institutions need to understand this very well because the estimates that have been made about how climate change is going to affect asset values are quite scary. And then you wonder, if those assets are going to devalue by so much, what’s going to happen to the financial system which is exposed to these assets?

The bigger risk is transition risk. Even before climate change actually creates havoc, such as with weather patterns, technological advances in renewables may leave many fossil fuel related assets stranded. Policy changes and increases in carbon taxes is going to make a huge difference to asset values. Shifts in consumer demand - just as you said, there is growing consciousness and people want to see action on the sustainability front - is going to be reflected in demand patterns. These could be huge shifts which the financial sector needs to be cognisant of, so we’ve been putting a lot of emphasis on this: on building up the capabilities, methodologies, and tools to measure these risks. In our stress tests in two years’ time, we hope to do some of these risk assessments against different types of climate scenarios, policy scenarios, and carbon prices. This is to see how resilient financial institutions are to climate risks, just as you test their balance sheets against GDP decline or unemployment increase.

Second, as we spoke earlier on, there is huge opportunity in the sustainability economy and green finance can be a force for good. We're working hard with the industry to develop more green financial products and solutions, especially to meet Asia's needs which is going to take a different trajectory from say, Europe. So how do you package financing solutions that match corporates to cleaner forms of energy, even if it's not the cleanest?

MAS is providing grants to facilitate green bonds and green loans. We're looking at insurance solutions that can mitigate climate risks, and natural catastrophe insurance that is also important for many Asian countries. There are many business opportunities for the financial industry and we are reaching out to financial institutions in Singapore to expand their ESG teams here in Asia. There's just so much greening and cleaning that needs to be done in Asia, and finance can be a very powerful lubricant. Finance can help get sustainability efforts going, because of the power that banks, insurance companies and asset managers have in influencing corporate decisions.

Third, technology. We're looking seriously at green fintech. We've seen how technology has transformed the provision of financial services. We're now looking at how technology can help in sustainable green financing flows. How do you verify that this is the carbon footprint that has been declared? You use sensors and blockchains, and other technologies to track the carbon footprint across the supply chain. There are some very interesting pilots going on. I've not seen anything on scale yet, but we believe in the potential of technology to solve these kinds of problems. Not all of them will work but we just have to plug away at it.

Finally, we have to build up strong capabilities. Sustainability is a complex area. The more I read about it, I realise how much more there is to know - there is science, technology, economics, geography, and a whole lot of subjects wrapped up in this area. So, you need to build up capabilities, especially in financial institutions. There are verification issues, so we need to build an ecosystem of rating agencies to get better at providing climate risk assessments. A whole new market infrastructure needs to be built up in this area. There is a huge amount of work to be done.

We've drawn up some of these plans and we've been working with the industry very closely. This is one of those issues where you need strong public-private partnership, or there's just no other way this can be done. Asia offers huge opportunities to do some of this work, and Singapore is quite set on doing it and to help Asia’s transition to a greener future.

Tim Adams: Yeah, without question. I note that there's a United Nations Environmental Programme (UNEP) and DBS Bank joint report noting that $200 billion of green investments is needed annually to support Asian economies. Central banks around the world are playing an important role. The ECB is going to buy green bonds; while Governor Kuroda of Bank of Japan thinks that Japan is not there. And in Europe, they have greening and brown capital factors to try to nudge investments. So, what about the MAS? Are you going to invest in green assets or are you thinking about using capital in a way to nudge the industry in one way or another?

Ravi Menon: Well, as a central bank, we won't know enough about what is a green investment to do this ourselves.

So what we are doing is, we've set aside US$2 billion to be placed with external fund managers with a strong green mandate, as announced last year. They are basically investing our money on our behalf, but with a sustainability focus. What we hope to achieve is to attract more of such asset managers to develop these capabilities in Singapore. Because to get our mandate, they would need to demonstrate that they have the capabilities to do this well. And if more of them are going to do this well, you're going to drive more smart money behind green projects - projects that reduce carbon or remove carbon entirely.

The other thing that's happening is a generational shift in wealth transfer. The Asian old money or first generation is moving on, and it's going to be a big transfer of wealth to the millennial generation. You probably know this better than I do - surveys show that millennials have quite a different take on sustainability. They are a lot more focused on putting their money where their values are, and sustainability is one of their important values. I think you're going to see a lot more shift when asset managers start pivoting their investment strategies. As more of them do it, you would get into a virtuous cycle. Because early on, you had some studies that showed green investments doing better than the brown ones, but the evidence was not compelling. But as more and more money goes into green investments and the world itself shifts its demand patterns, then it becomes a virtuous cycle: green assets actually do outperform.

Do I have enough confidence to put different capital weights for banks’ green and brown assets? Not quite yet, I don't think the data is that robust. But as we do more stress testing of portfolios against rise in carbon prices or breakthrough advances in solar technology or wind technology that changes relative prices, that would have an impact on asset values, balance sheet and P&L; then banks will change behaviour.

Whether there'll be a Basel IV that differentiates green and brown assets, I really don't know. I don't think we'll have enough data for at least ten years; but I think long before that, with these kinds of supervisory tools, you can get quite far.

Tim Adams: You are working with the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) and other international standard setting boards, and I know the Financial Stability Board (FSB) is starting to take a strong look at it, and we will be briefing the Basel Committee as well. So we do see, you know, standard setters taking a more holistic approach which we think is important – you know, let a thousand flowers bloom - but ultimately we need consistency. One area where we've spent a lot of time right now is scaling voluntary carbon offset markets, where there's a proliferation of small discrete markets but we need to scale it across the board. To your point, you can't get scale without standardisation and data. But I assume that you are well plugged into the global process and you feel comfortable where that global conversation is going.

Ravi Menon: Yes, that has been a problem. I think the conversations are genuine, but I'm not sure we're at a point where we are close to getting consistency that is going to allow pooling of liquidity. These carbon offset markets are fragmented; they have different standards and norms. I'm not sure we are close to getting a common template that's going to bring them together. But you're right, until that happens, I can't see liquidity building up to a point where you can actually trade these with confidence.

So, we are a bit of two minds - we're trying to promote carbon credits trading, but there is not much we can do on our own. But I wonder if this is something that IIF can put some fire under. Without this carbon offset market, you're just not going to get efficient outcomes. Many countries are still relying on fossil fuels, so you need the ability to trade the credits, but it needs to be done with common standards. Today, there are enough instances of greenwashing, that you just don't have enough confidence.

Tim Adams: I think there's huge opportunity for us to scale and to take across jurisdictions through standardisation. Ultimately you need indexes of contracts, like what we have for the oil market in Brent or West Texas Intermediate. We have those kinds of base contracts, but it doesn’t exist with carbon markets in a scaled way so we're working on it. But you brought up a good point about greenwashing which I worry a tremendous about. Is there a chance that we have so much demand for green assets and not enough supply, that we could potentially have a bubble in green assets, or we have a degradation of the quality of those assets to the point you just raised?

Ravi Menon: I think we're seeing some amount of the latter. Because the demand is great, there is a strong incentive to meet that demand with less than high standards. We're seeing some of that degradation taking place, and even some of the best financial institutions get caught out in this having invested in something they thought was green but turns out it wasn't and that could be hugely embarrassing.
On whether there'll be a bubble, I've not really thought about that. When demand exceeds supply, that's one of the things you get. It may well happen. Now you've given me an added problem to think about.

Tim Adams: Sorry about that. Well, if I didn't leave here adding something on your list, I'd be disappointed. But I know that, given your capabilities and those of your colleagues, there is no problem too large you can't soar through.

Ravi Menon: We have to work with the industry to address these problems. We also look forward to working with the IIF on green and sustainable finance. I think there's huge opportunity here and we can make the world better, working together.

Tim Adams: I agree. I'm really excited and my colleagues will tell you maybe sometimes too excited, but I think this is the most consequential thing we'll work on in our professional careers. Ravi, we have run out of time. I could stay here all day with you. Unfortunately, I can't, but thank you so much for taking your time. I know it's late in the evening there, and you've got a busy week ahead. Thank you for helping us kick off a very long week ahead and I look forward to seeing you in person as soon as I can possibly get there, and maybe have dinner on Singapore Airlines sitting out on the tarmac.

Ravi Menon: Tim, thanks very much. Take care.