US ECONOMICS

Treasury. Friday, April 21, 2017. Remarks of Secretary Steven Mnuchin as prepared for delivery

Washington, D.C.
Mr. President:

It is a great honor to have you here at Treasury. Since day one, I have made clear that our priority in working for you is delivering economic growth for hardworking Americans. To this end, we are focused on achieving comprehensive tax reform and regulatory relief for the American people.

Your Core Principles of financial regulation have been guiding our work here and will continue to do so. I am happy to report that we are busy in our review – not just of Dodd-Frank, but the broader economic framework as well. We have met with stakeholder groups of hundreds of people, representing small banks, big banks, non-financial institutions, consumers, and regulators. This review is thorough and mindful of our goals. We look forward to delivering our findings in June.

Your directives today further highlight the priority this administration places on fair and efficient regulatory relief. They provide further focus and depth to our mission here.

We’re going to go back and look to see if the processes regarding the Orderly Liquidation Authority and the Financial Stability Oversight Council make sense. We now have a targeted mandate in place to review both. As instructed, I will report back to you on our findings.

In the interim, you are calling for a much needed time-out from the Financial Stability Oversight Council’s process for designating financial institutions as systemically important. Until that review is completed, we have agreed not to designate any new non-bank financial institutions under the FSOC process, except in cases of emergency. Our goal is to make this a smarter, more effective process that reduces the kinds of systemic risk that harmed so many Americans during the financial crisis of 2008. 

On the Orderly Liquidation Authority, we are going to look closely to evaluate whether its framework is consistent with your Core Principles. We intend to provide a clear analysis of the extent to which the OLA encourages inappropriate risk-taking and the extent of potential taxpayer liability. We will also note where additions to the bankruptcy code may be a more appropriate avenue of resolving financial distress.

Finally, today’s Executive Order launches a reexamination of last year’s major tax regulations to make sure they do not unduly strain the American economy. The order calls for revision or repeal of harmful rules that impose unnecessary costs and complexity on taxpayers. I look forward to taking a hard look at the immense regulatory burden of our tax code, which consumes billions of productive hours in compliance costs.

A significant amount of time has passed since the crisis. With the passage of time and with your leadership, we are now well positioned to evaluate what works and what doesn’t. We believe in clear and effective regulations, but not regulation for its own sake. Where we can do so, we will lift the burden of excessive regulation to make sure that banks can lend, small businesses can borrow, and American workers can thrive. 

So on behalf of the entire staff here at Treasury, who work tirelessly to make this country prosperous and safe, I want to extend our warmest welcome. Ladies and gentlemen, the President of the United States.

Treasury. April 21, 2017. IMFC Statement. Statement of Secretary Mnuchin for the International Monetary and Financial Committee (IMFC) Meeting

I look forward to participating in this spring's IMFC meetings, which provide us an opportunity to assess global economic prospects and to discuss the important role of the IMF in promoting strong, sustainable, balanced, and inclusive economic growth.

The U.S. economy continues to expand at a steady pace, and forecasts suggest stronger growth this year and next.  Consumer confidence has risen noticeably in recent months and remains near multi-year highs, while labor market conditions continue to improve.  Rising home prices, equity gains, and deleveraging progress have contributed to improved household balance sheets.  While increasing, headline inflation remains relatively low, and core inflation is stable. 

Nevertheless, the U.S. economy continues to face challenges, with growth last year languishing below pre-crisis levels amid weak business investment.  The economy has gone through periods of disappointing performance before, however, and a continuation of this weak growth is not pre-ordained.  In response, the Administration is undertaking an ambitious policy agenda that includes tax reform, deregulation, and infrastructure investment to sustainably raise U.S. economic output and employment.  In tandem with our domestic reforms we will continue to promote an expansion of trade with those partners committed to market-based competition, while more rigorously defending ourselves against unfair trade practices.

Outside the United States, while the IMF and private analysts expect global growth to expand this year and next, there are questions about how sustainable and broad-based this growth will be.  Medium-term growth prospects remain muted due in part to the decline in total factor productivity, continued weak domestic demand, and banking-sector problems in some countries.   

Significantly, the global economy continues to exhibit large and persistent external imbalances, which contribute to the sentiment that the existing international monetary and trading system does not benefit all.  In this environment, the United States calls upon the IMF to more robustly fulfill its surveillance mandate in pursuit of strong, sustainable, balanced, and inclusive global growth.  This should include strong analysis of member exchange rates and external imbalances in both the External Sector Report and in Article IV surveillance.  The IMF should also identify specific policy adjustments at the country level to achieve substantially improved balance in the overall system.  We look to the IMF to highlight where surplus countries can more forcefully contribute to support symmetric adjustment in pursuit of a fairer global system.

Countries with large external surpluses and sound public finances have a particular responsibility for contributing to a more robust global economy by deploying fiscal policy aggressively to boost growth and help facilitate global rebalancing.  In our view, excessively large trade surpluses, like excessively large trade deficits, are not conducive to supporting a free and fair trading system.  Fair and transparent currency practices are also a critical part of ensuring that the benefits of trade are shared equitably.  Countries should abide by their exchange rate commitments, including commitments to refrain from competitive devaluation, to not use monetary policies to target exchanges rates for competitive purposes, and to consult closely on exchange rates.

For many decades, the IMF has played a key role in anchoring the international monetary system and in promoting international cooperation to achieve strong, sustainable, balanced, and inclusive growth.  We welcome the IMF's role in providing expert guidance and financial assistance in countries as diverse as Ukraine and Egypt.  We encourage the IMF to remain steadfast in encouraging the difficult but necessary structural reforms that are critical to sustained and inclusive growth in these countries.  We also recognize the IMF's crucial role in helping low income countries achieve macroeconomic stability.  In countries like Guinea, Liberia, and Côte d'Ivoire the IMF has been responsive and flexible in rapidly changing circumstances, including the Ebola crisis and severe commodity price shocks.

Targeting and dismantling the financial networks of terrorist organizations is a top U.S. priority, and improving anti-money laundering and counter terrorist financing (AML/CFT) systems is critical to this goal.  We welcome the IMF's important work providing technical assistance to member countries to strengthen their regulatory and supervisory frameworks with respect to anti-money laundering and countering the financing of terrorism.  It is also imperative that the IMF be a leader in fighting corruption.

We also support the IMF's work on the low-income debt sustainability framework, given rising debt burdens across a number of low-income countries.  The IMF should remain vigilant in monitoring debt levels, assist countries in strengthening debt management capacity, and work harder to avoid another lend-and-forgive cycle, which would damage IMF credibility and jeopardize economic gains in low income countries.

We look forward to continuing international cooperation via the IMF to secure sustainable growth and a more robust and fair global economy.

Treasury. 04/21/2017. Development Committee Statement. Statement of Steven T. Mnuchin for the Development Committee

I look forward to productive Spring Meetings of the World Bank and the International Monetary Fund.  I hope these Meetings will enable us to advance our common goals of creating the conditions for stronger global growth that helps reduce poverty around the world.  

We meet during a period when the U.S. economy continues to expand at a steady pace, and forecasts suggest stronger growth this year and next.  Nevertheless, we recognize that the U.S. economy continues to face both internal and external challenges, and in response are undertaking an ambitious policy agenda that includes tax reform, deregulation, and infrastructure investment to sustainably raise U.S. economic output and employment.  A faster growing United States will be a boost for the global economy. 

While there have been encouraging signs recently that global growth is strengthening, the recovery is not yet firmly enough entrenched to ensure a self-sustaining cycle of global demand growth and reflation.  And other challenges remain, reiterating the urgency of concerted action to achieve strong, balanced, and more inclusive growth.  In particular, the risks in Sub-Saharan Africa are acute, as evidenced by the growing number of food crises.  Through its convening power and financing, the Bank is enabling decisive humanitarian action to address the devastating famines in Africa and the Middle East.  We also welcome the Bank's leadership in exploring, consistent with its mandate and comparative advantage, how to alleviate the short-term impact of the current crisis and strengthen resilience through targeted investments over the medium- to long-term.

The Eighteenth Replenishment of the International Development Association (IDA-18)

The United States is committed to remaining a top donor to IDA.  Despite a highly constrained budget environment, President Trump plans to submit a robust request to Congress to support the landmark IDA-18 replenishment.  IDA's innovative financing framework will help to ensure that adequate resources, including those generated by the Bank's own balance sheet, are available for the world's poorest and most vulnerable.

We welcome the reform commitments that underpin this IDA replenishment, especially greater attention to fragile and conflict-affected states.  The World Bank is well positioned to address some of the underlying causes of instability and lay the groundwork for stronger and more resilient economies that attract private investment to create much-needed jobs and opportunity for youth across the developing world.

We also commend IDA's focus on conflict prevention through more effective risk assessments, earlier interventions, and stronger cooperation across the spectrum of state and non-state institutions.  These efforts should have positive benefits beyond conflict prevention, such as reducing the threat of conflict-induced food crises.

Private Sector Development

We applaud the World Bank's emphasis on the private sector as the engine of growth and the launch of a bold strategy intended to unleash private investment in the world's poorest countries.  We welcome the ambitious scale of the endeavor – to actually create markets in poor economies – and hope that the new joint International Finance Corporation (IFC)-Multilateral Investment Guarantee Agency (MIGA)-IDA private sector window proves catalytic in furthering this objective.  Private sector development that actually boosts growths and improves livelihoods in the world's poorest nations is a difficult task.  By leveraging private investment and systemically addressing risks, the private sector window and the Bank as a whole are positioned to support job creation and create opportunities in the most difficult environments.

More inclusive growth, a focus of discussions this week, means creating opportunities across the breadth and depth of our societies.  Critically, this includes boosting women's economic empowerment, especially through entrepreneurship, an aim shared by this Administration.  We look forward to collaborating closely with the World Bank and other shareholders to deliver on this exciting agenda.

As we seek to appropriately stimulate private sector growth as a means to foster investment and create jobs and opportunity, we need to be extremely judicious in the use of public resources.  This is particularly true when it comes to financing state-owned enterprises, especially in projects intended to support cross-border expansion.

Business Model

We take note of the rich discussion among shareholders and Management on the collective vision for the World Bank Group.  In this context, we would like to underscore three points. 

First, continued high lending to countries above the Bank's own graduation threshold is problematic since it diverts limited Bank resources to countries with substantial access to other sources of finance; we therefore endorse the proposed shift in allocation to lower middle-income countries that have more difficulty accessing the financing needed to fund their development. 

Second, we believe that more can be done to optimize the World Bank's balance sheet to avoid a precipitous decline in lending, and we look forward to discussing a full suite of options at a later date.  For this reason, we do not view the original schedule for considering the Bank's capital position as necessary or realistic. 

Finally, we believe that the Bank must continue to strengthen its focus on outcomes, results, and accountability.  Strengthening project design, monitoring, evaluation, and supervision are crucial to effective delivery.  Adequate resources and incentives need to be dedicated to these activities – including to implement fully the new environmental and social framework approved last year – so that we can measure the Bank's success based on development outcomes, not just the dollar value of projects.  Strong accountability also requires mechanisms that are independent and able to identify weaknesses in project design and delivery.  In this vein, the modernization of the Bank's Inspection Panel is necessary to keep apace with best practices.

We look forward to continuing our strong and effective partnership with the Bank and other shareholders.

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CANADA ECONOMICS

Global Affairs Canada. April 22, 2017. Minister of Foreign Affairs concludes visit to Sedona, Arizona

The Canada-United States partnership is essential to our shared prosperity and security, and today the Honourable Chrystia Freeland, Minister of Foreign Affairs, concluded her visit to the Sedona Forum in Arizona.

The Sedona Forum is The McCain Institute’s annual, high-level gathering of national and international government, business, academic and civil society leaders held in the red rock country of Sedona, Arizona.

While at the Forum, the Minister met with U.S. National Security Advisor H.R. McMaster to discuss international security cooperation between the two countries. She also led a discussion on human rights in Russia, Ukraine and Syria and met with human rights activists from Russia and Syria, as well as Ukrainian Member of Parliament Mustafa Nayyem. At the Sedona Forum, the Minister met with Senator John McCain (R) of Arizona and Senator Amy Klobuchar (D) of Minnesota to discuss approaches and solutions to trade, energy and security issues.

Quotes

“Canada and the United States have the longest, most peaceful and mutually beneficial partnership of any two countries.

“Venues like the Sedona Forum offer a key opportunity to underscore the importance of working together to create more opportunities for the middle class on both sides of the border—as well as how we can advance democracy, human rights and national security.”

- Hon. Chrystia Freeland, P.C., M.P., Minister of Foreign Affairs

Quick facts

• This was the Minister’s first time attending the Forum since becoming Minister of Foreign Affairs. She previously participated in 2013.
• The Sedona Forum aims to advance leadership based on security, economic opportunity, freedom and human dignity in the United States and around the world.
• The McCain Institute was founded by U.S. Senator John McCain in partnership with Arizona State University.

The McCain Institute for International Leadership: https://www.mccaininstitute.org/

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LGCJ.: