the last couple of weeks. what concerns have people raised with you? you know, it varies. when i talk to family members, they say, “ explain what you do, mum, please? we don ’ t really understand! ” that ’ s a really good signal for me that we need to communicate in a more explicit way about what we procure. if we explain exactly what we do, it ’ s technically sound – the experts will understand. family members and the taxi drivers, the hairdressers and the shopkeepers are not going to understand. if we explain that what we do actually procures growth, facilitates investment and creates jobs, then it means something. but we should not be the only one to try to do that! is it reconnecting with the citizens? i think that ’ s an important factor, yes, because people of europe – particularly the euro area – are quite bullish about the euro. they are pleased to have the euro as their currency. and we do everything we can to make sure that euros can flow easily, that payments are secure, that what they have is solid, is stability. but i think we need to do a bit more. a lot of the focus here is on sustainability. you talked about sustainability. yes. is there a danger that we have outsized expectations about what central banks can do to tackle this? possibly, but i think that nonetheless, each and every one of us has to explore what he or she can do about the current risks. i think that it has been under … the risks caused by climate change to corporates, to the economy, to general stability have been largely underestimated – and for good reasons, because many risks are difficult to assess. we are talking about what happens in 30 years. it ’ s not on the cards of a stress tester to anticipate what happens in 30 years. you look at the immediate future, you look at the market risks, you look at macro risks. but the climate risks in 30 years, that need action now if we want to remedy those risks, that ’ s 3 / 5 bis central bankers'speeches difficult – but we need to do it, absolutely. do you worry that the more questions you ask … lagarde : and by the way, central bankers can do quite a bit. like what? if you force, for example, financial institutions or ask for them to stress test climate change, how much complexity does that

. regime, based on basel i. the global banks ’ concerns about the bifurcated u. s. application depend in part on whether they are based here or abroad. for foreign banks the issue is the additional complexity and perceived inequity they will face if they have chosen to operate in the rest of the world under the foundation approach for credit risk, an approach which will not be permissible in the united states. ( i am making the reasonable assumption that the foreign banks whose u. s. subsidiaries would be required to use the advanced approach, or who, for competitive or other reasons, choose the advanced approach in the united states, will be operating in their home country under the foundation approach at least. ) for u. s. - based banks the fear is that foreign rivals may get a competitive edge for one year through lower regulatory capital requirements in some markets ; the potential head start for foreign banks arises because the permissible start date for the foundation and standardized versions is the beginning of 2007, while the advanced approach, with its greater complexity for banks and supervisors, starts in all markets at the beginning of 2008. a foreign bank under the foundation approach at home but under the advanced approach in the united states would have to determine two variables in the united states for its corporate exposures that would not be required of its consolidated entity : loss given default ( lgd ) and exposure at default ( ead ). for its consolidated entity at home it would need to calculate only the probability of default. the u. s. subsidiary might well find it a real challenge to gather the needed data and generate the lgd and ead parameters required in the united states ; doing so would certainly add cost, even for an entity using the full foundation approach at home. the u. s. authorities did not make their decision to require the advanced approach lightly. given the structure and size of our markets, we believe it necessary that large entities operating here use sophisticated techniques for risk measurement and management that rely on bank estimates of all the risk variables required by the advanced approach. nonetheless, we understand our global responsibilities for cooperation. both bilaterally and through the aig, we will continue to work with u. s. subsidiaries of foreign banks and their home supervisors on transition steps, where necessary, although we expect to continue to require full implementation within a reasonable period of time. these transition steps could involve, for example, relying on conservative estimates of the lgd and ead parameters when the