NOTES

Foreword by Gordon Brown

1. http://www.un.org/press/en/1999/19990201.sgsm6881.html.

2. https://www.gmu.edu/centers/publicchoice/faculty%20pages/Tyler/Manila.pdf.

3. http://www.the-american-interest.com/2016/07/10/when-and-why-nationalism-beats-globalism/.

4. http://www.huffingtonpost.com/georg-kell/globalization-four-ways-t_b_11081332.html.

Introduction

1. H. R. McMaster, and Gary Cohn, “America First Doesn’t Mean America Alone,” Wall Street Journal, May 30, 2017.

2. These innovations are the creation of International Finance Facility for Immunization and Unitaid, as described in Chapter 10.

3. Created in 1904 by two Catholic laypeople after the exciting publication of Rerum Novarum, the encyclical letter by Pope Leo XIII considered to be the foundation for the Church’s modern social doctrine, the Semaines Sociales de France is a watchdog for society and one of the oldest think tanks in France.

4. Michel Camdessus, Bertrand Badré, Ivan Chéret, Pierre-Frédéric Ténière-Buchot, Eau (Robert Laffont: 2004). The present book regularly reflects on this work and what I learned then.

5. Michel Camdessus, Le Sursaut. Vers une nouvelle croissance pour la France, Report of the Minister of the Economy, Finance, and Industry (La Documentation Française, October 2004).

6. Original translation from Antoine de Saint-Exupéry, Citadelle (1948).

Chapter 1

1. Michel Camdessus et al., Eau.

2. “Official development assistance (ODA) includes all financial transfers for which the ‘grant element,’ according to the definition given by the OECD Development Assistance Committee (DAC), represents at least 25 percent of the total. In other words, it means aid. Generally, these comprise State-to-State transfers, or bilateral aid. A smaller but no less important aspect is multilateral ODA, by the World Bank, the IMF, concessional funds held by regional development banks, various aid funds from the European Union, and other United Nations agencies such as the United Nations Development Programme (UNDP), UNICEF, WHO, and FAO. These multilateral development agencies provide loans at close to market rates. Although they do not quite meet the DAC’s definition of ODA, these loans are much more attractive offers than what commercial banks and other lenders can give. Other bilateral agencies with development assistance objectives operate in a more commercial manner and offer capital shares, securities, or near-market-rate loans (for example: USAID in the US, KfW in Germany, AFD in France, the CDC in England, or the JBIC in Japan). They share many common features with multilateral financial institutions.” Original translation from Camdessus et al., Eau, pp. 228–29.

3. United Nations, The Millennium Development Goals Report (United Nations, 2015), http://www.un.org/millenniumgoals/2015_MDG_Report/pdf/MDG%202015%20rev%20(July%201).pdf.

4. United Nations, “Beyond the Millennium Development Goals: The Post-2015 Sustainable Development Agenda” (UN Department of Public Information, September 2013), http://www.un.org/millenniumgoals/pdf/EN_MDG_backgrounder.pdf.

5. In 2005 the international poverty threshold was $1.25 per day. The World Bank adjusted this figure in 2015 to $1.90 per day.

6. United Nations, “Beyond the Millennium Development Goals.”

7. United Nations, The Millennium Development Goals Report 2015 (United Nations, 2015), http://www.un.org/millenniumgoals/2015_MDG_Report/pdf/MDG%202015%20rev%20(July%201).pdf.

8. United Nations, “Beyond the Millennium Development Goals.”

9. Ranked by the gross domestic product, adjusted for purchasing power parity. “Gross Domestic Product,” World Bank, 2014.

10. Ibid.

11. United Nations, The Millennium Development Goals Report 2013 (United Nations, 2013), www.un.org/millenniumgoals/pdf/report-2013/mdg-report-2013-english.pdf.

12. “China today boasts roughly five workers for every retiree. By 2040, this highly desirable ratio will have collapsed to about 1.6 to 1.” Howard W. French, “China’s Twilight Years,” The Atlantic, June 2016.

13. Richard Dobbs, James Manyika, and Jonathan Woetzel, No Ordinary Disruption: The Four Global Forces Breaking All the Trends (Public Affairs, 2016). Reviewed in Public Affairs, May 2015.

14. Luoyang is one of China’s historic capitals, located on the Yellow River; it boasts nearly 7 million inhabitants.

15. United Nations, The Millennium Development Goals Report 2013.

16. Ibid.

17. Data from the World Bank.

18. New development data that highlights the success, and sometimes failure, of these policies can be found in the Doing Business report published each year by the World Bank.

19. Original translation from Michel Serres, Petite Poucette (Le Pommier: Collection Manifestes, 2012).

20. Ibid., pp. 15–16.

21. United Nations, “Beyond the Millennium Development Goals.”

22. Salim Ismail, Exponential Organizations: Why New Organizations Are Ten Times Better, Faster, and Cheaper Than Yours (and What to Do about It) (Diversion Books, 2014).

23. Camdessus et al., Eau, p. 154.

24. United Nations, A New Global Partnership: Eradicate Poverty and Transform Economies through Sustainable Development (United Nations, 2013), https://sustainabledevelopment.un.org/content/documents/8932013–05%20-%20HLP%20Report%20-%20A%20New%20Global%20Partnership.pdf.

Chapter 2

1. Adair Turner, Between Debt and the Devil: Money, Credit, and Fixing Global Finance (Princeton University Press, 2015), p. 93.

2. Percentage of population living in absolute poverty computed by the World Bank. As demonstrated by many, in particular, Amartya Sen, poverty cannot be reduced to a monetary factor. The drop in poverty is, however, real, even if disputed in its measurement.

3. Turner, Between Debt and the Devil, p.1.

4. Securitization is a financial technique that consists of transforming less liquid assets (loans, receivables, etc.) into financial securities issued by capital markets (bonds, for example) by transferring them to investors.

5. Even at this time, despite the increase in signs of “irrational exuberance,” Alan Greenspan, then president of the US Federal Reserve, was presented as an all-powerful conductor. See Bob Woodward, Maestro: Greenspan’s Fed and the American Boom (Simon & Schuster, 2001).

6. For more on shadow banking, see Chapter 8.

7. Turner, Between Debt and the Devil, p. 26.

8. Certification is the confirmation of certain properties, such as of a building, a supertanker, or a toy, for the intended market.

9. Interestingly, during a discussion we had at the Peterson Institute in June 2016, Neel Kashkari, chair of the Federal Reserve of Minneapolis, noted that the US Treasury had worked up several crisis scenarios, but a fall in real estate prices was not even imagined.

10. Around $1.5 trillion isn’t much at the scale of international finance—but that is still an enormous amount for an individual country.

Chapter 3

1. François Rabelais, Pantagruel (1542): “Science sans conscience n’est que ruine de l’âme” (Science without conscience is but the ruin of the soul).

2. See Charles P. Kindleberger, Manias, Panics, and Crashes: A History of Financial Crises (Wiley, 2000).

3. See C. M. Reinhart and K. S. Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton University Press, 2009).

4. In particular Gaussian models.

5. Turner, Between Debt and the Devil, p. 2. We should also remember the relevance and clear thinking of Raghuram Rajan, chief economist for the IMF, who back in 2005 cautioned against the system’s hidden risks and who in 2010 stressed that “hidden fractures still threaten the world economy.” See Raghuram Rajan, Fault Lines: How Hidden Fractures Still Threaten the World Economy (Princeton University Press, 2011).

6. Turner, Between Debt and the Devil, p. 3.

7. Ibid.

8. Bertrand Badré, “Un banquier dans la tourment,” in Michel Cool, Pour un capitalisme au service l’homme. Parole de patrons chrétiens (Capitalism in the service of mankind: Testimonies from Christian managers) (Albin Michel, 2009), p. 112.

9. The LIBOR refers to a series of benchmark money market rates according to various currencies.

10. Shares would later fall to less than €2.

11. See John Micklethwait and Adrian Wooldridge, A Future Perfect: The Challenge and Hidden Promise of Globalization (Crown Business, 2000).

12. Alain Peyrefitte, La société de confiance: Essais sur les origines du développement (The trust society: Essays on the origins of development) (Odile Jacob, 2005).

Chapter 4

1. Development Committee, From Billions to Trillions: Transforming Development Finance Post-2015 Financing for Development: Multilateral Development Finance (report prepared through the cooperation of the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank, the World Bank Group, and the International Monetary Fund for the Development Committee meeting held on April 18, 2015).

2. With a first/second loss mechanism, a public party to the agreement agrees to cover the first/second loss of an investment up to a preagreed amount under certain conditions.

3. The cost could be up to €450 billion annually by 2050, according to the UN.

4. Carbon prices signal that carbon consumption includes the cost of externalities.

5. Camdessus et al., Eau, p. 107.

6. Ibid., pp. 139–40.

7. Ibid., p. 140.

8. See, for example, Ibid., p. 140–41: “We suspected the industrialists of being interested only in short-term profits and the exploitation of the poor by having them pay too dearly for water from which they dreamed they might some day become completely deprived. The NGOs would prevent us from self-serving business deals. . . . Private bankers, naturally heartless, would refuse to lend enough money to emerging and developing nations and to projects that might help them develop, halting the machine. . . . Development agencies and other public bankers are uneasy. On the one hand, they are first in line when it comes to financing development infrastructure. They are the stars, so to speak. But on the other hand, we have to acknowledge that their contributions have steadily declined for years. . . . It is thus the politicians who are clearly responsible, or irresponsible, since they have never made water their priority, which is at the root of our catastrophe.”

9. Ibid., p. 141.

10. Ibid., p. 8.

11. Ibid., p. 9.

Chapter 5

1. This strong monetary control is exercised by a semifloating exchange system and a central rate (which was depreciated in August 2015) around which the yuan can change within a range of plus or minus 2 percent.

2. In purchasing power parity, China is the largest economy in the world.

3. Marie Charrel, “Les gouvernements doivent agir pour restaurer la croissance” Le Monde Economie, January 14, 2016, http://www.lemonde.fr/economie/article/2016/01/14/les-gouvernements-doivent-agir-pour-restaurer-la-croissance_4846974_3234.html. See a similar interview in English here: Dan Weil, “El-Erian: The Global Economy Needs Governments to Step Up,” Yahoo! Finance, June 7, 2016, http://finance.yahoo.com/news/el-erian-global-economy-needs-101500524.html.

4. Emmanuel Hache, “Fin de cycle sur les marches de matières premières: un nouvau paradigm économique et géopolitique?” IRIS Analyses, January 25, 2016, http://www.iris-france.org/70347-fin-de-cycle-sur-les-marches-de-matieres-premieres-un-nouveau-paradigme-economique-et-geopolitique/. See a similar article in English: Shelley Goldberg, “The End of the Commodity Super Cycle,” Wall St. Daily, September 1, 2015, https://www.wallstreetdaily.com/2015/09/01/commodity-prices-super-cycle/.

5. The uncertainties of 2016 clearly influenced the willingness of the Federal Reserve to increase rates at a regular interval, adding a new source of uncertainty to all the others.

6. Mohamed El-Erian, The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse (Random House, 2016).

7. Chris Giles, “Fears on Global Downturn are Overdone Say Economists” Financial Times, March 7, 2016. https://www.ft.com/content/ea13c478-e47b-11e5-bc31-138df2ae9ee6.

8. David Lipton, “Can Globalization Still Deliver? The Challenge of Convergence in the 21st Century” (Sixteenth Annual Stavros Niarchos Foundation Lecture at the Peterson Institute for International Economics, May 24, 2016).

9. “Number of Conflicts, 1975–2016,” Uppsala Conflict Data Program, accessed September 13, 2017, http://ucdp.uu.se/.

10. Eurovision is an annual pan-European song contest.

11. Relatively speaking, because at first glance, the decrease in gas prices stimulates less growth than usual, since part of the gain realized is saved by more cautious consumers.

12. “The Plague of Global Terrorism,” The Economist, November 18, 2015, http://www.economist.com/blogs/graphicdetail/2015/11/daily-chart-12.

13. The Schengen Area is made up of 26 European states that have no border controls.

14. “World Is Locked into about 1.5°C Warming and Risks Are Rising, New Climate Report Finds,” World Bank, November 23, 2014, http://www.worldbank.org/en/news/feature/2014/11/23/climate-report-finds-temperature-rise-locked-in-risks-rising.

15. “Signature de l’Accord de Paris sur le climat: une première étape nécessaire, mais pas suffisante, selon l’ONU,” Centre d’actualités de l’ONU, April 21, 2016, http://www.un.org/apps/newsFr/storyF.asp?NewsID=37072#.V0LVFlmMfoc.

16. Ibid.

Chapter 6

1. Peter H. Diamandis and Steven Kotler, Abundance: The Future Is Better Than You Think (Free Press, 2012).

2. Antoine de Saint-Exupéry, Wind, Sand and Stars (Reynal and Hitchcock, 1939).

3. Ian Bremmer, “The Absence of Global Leadership Will Shape a Tumultuous 2016,” Time, December 21, 2015, http://time.com/4154044/geopolitics-2016/.

Chapter 7

1. Michel Cicurel, “La planète finance danse sur un fil” (The financial world dances on a thread), La Tribune, January 30, 2007.

2. Lipton, “Can Globalization Still Deliver?”

3. Reference to a quote by Karl Marx: “Those who ignore history are condemned to repeat it.” Communist Party Manifesto, 1847.

4. Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable (Random House, 2007).

5. In 1975 during a referendum to join the European Union, the proponents in the United Kingdom campaigned with the argument “We cannot go it alone in the world.” This argument applied so much more in 2016!

6. Jacques de Chalendar (1920–2015) was special adviser to the director of national safety for unoccupied France in 1942, while at the same time being a member of the Resistance who joined the Inspectorate General of Finances in 1944. He became inspector general in 1973, and was deputy director general of Banque nationale pour le développement économique du Maroc (the National Economic Development Bank of Morocco), 1959–1962, adviser to the cabinet of Edgar Faure, minister of national education, 1968–1969, then president of the Association pour le développement des échanges en technologies économique et financière (Association for the Development of Economic and Financial Technology Exchanges), 1984–1989.

7. In a conference held May 24, 2016, at the Peterson Institute, David Lipton observed that even if China never provides the boost it has in recent years, it still contributes to the world economy; a country of this size registering 5 percent growth is the equivalent to adding a Poland to the world’s wealth every year. India, as well as a dozen other countries such as Vietnam, Bangladesh, Colombia, Peru, and even Ethiopia, also represents enormous potential.

8. I founded Blue like an Orange Sustainable Capital because I want to devote myself to connecting these needs and resources. As Paul Éluard wrote, the Earth is blue like an orange; it’s up to us to take care of it.

9. Mark Carney, “Breaking the Tragedy of the Horizon—Climate Change and Financial Stability” (speech given at Lloyd’s of London, September 29, 2015).

10. Ibid.

11. “Seize your luck, hold your happiness tight, and run toward your risk. The more they see you, the more they will get used to it.” René Char, “Mornings’ Blush,” in Les Matinaux (Gallimard, 1950). The name of the resistance poet happens be the same as that for my graduating class at ENA—a sign?

12. This is one of the beliefs I inherited from Michel Camdessus, during the era of the Semaines sociales de France. We drafted the Sursaut (The jolt) report together for the Ministry of the Economy, Finance, and Industry, a report considered to be “ultraliberal” by some members of the Catholic Social movement. In the face of protests, Michel quoted Charles Péguy regarding Kantian morality: “Kantism has clean hands, but it does not have hands. But us, we have callused hands, gnarled hands, dry hands, and sometimes, our hands are full.” Victor-Marie, comte Hugo, 1910. We cannot change the world without getting our hands a bit dirty. The only maneuvering room we have is to try to keep them dirty instead of filthy, to grapple with what is real while trying not to lose sight of our convictions.

13. Badré, “Un banquier dans la tourment,” p. 113.

Chapter 8

1. Jérôme Kerviel began working for Société Générale in the summer of 2000. He was responsible for the 2008 trading loss of approximately €4.9 billion and was later convicted of breach of trust, forgery, and unauthorized use of bank computers.

2. The idea of reenchantment was addressed at length by the German sociologist Max Weber.

3. Jean Boissonat, personal communication with the author.

4. “Sustainable Energy for All: Sector Results Profile,” World Bank, April 9, 2014, http://www.worldbank.org/en/results/2013/04/10/sustainable-energy-for-all-results-profile.

5. Tier 1 designates the most solid part, the hard kernel, of funds held by financial institutions. After the crisis, regulators differentiated the naming into three sets of funds (T1, T2, T3) to emphasize that they do not all have the same value, and that an institution’s true capital, its share capital (Core-T1), should be reinforced.

6. A clearinghouse is a financial body that acts as an intermediary between buyer and seller to guarantee delivery and receipt in transactions.

7. Tier 1 designates the most solid part, the hard kernel, of funds held by financial institutions. Going forward, banks must maintain a Tier 1 of 7 percent (instead of the precrisis 4 percent) and a Core-T1 of 4 percent (instead of 2 percent). They must also retain a supplemental buffer of 2.5 percent of their profits during times of economic prosperity (rather than distributing this as dividends or buying back shares), to which a surcharge is added to institutions systemic in nature.

8. Total loss-absorbing capacity is a resource buffer made up of debt instruments that can be easily converted to capital in order to protect taxpayers in the event of difficulties.

9. Transformation is the heart of the banking business. It involves the “transformation” of short-term resources (such as deposits) into long-term uses (loans for housing for infrastructure, for example).

10. Mark Carney and Bertrand Badré, “Keep Finance Safe but Do Not Shut Out the Vulnerable,” Financial Times, June 2, 2015.

11. See, for instance, Ibid.: “When institutions acted as correspondents, they relied on their local ‘respondents’ to develop systems that prevented the two sides from doing business with criminals or transferring illicit funds. These systems sometimes failed and certain international banks, deliberately or not, provided accounts and money laundering services, facilitating the activities of drug cartels and terrorist groups.”

12. Today, it is no longer possible to transfer money to Somalian refugee camps, which is problematic to say the least.

13. Blockchains are secured, distributed databases that are shared between various users without an intermediary and that contain the history of changes made between these users since its creation. This blockchain system allows each user to guarantee at any given moment the authenticity and individuality of its transactions.

Chapter 9

1. “Seven Themes of Catholic Social Teaching,” United States Conference of Catholic Bishops, accessed September 13, 2017, http://www.usccb.org/beliefs-and-teachings/what-we-believe/catholic-social-teaching/seven-themes-of-catholic-social-teaching.cfm.

2. Pope Francis, “Pope Francis: Stop the Culture of Waste,” OnFaith, accessed September 13, 2017, https://www.onfaith.co/onfaith/2014/04/21/pope-francis-stop-the-culture-of-waste/31766.

3. Pope Francis, “Address to Global Foundation Roundtable,” Vatican Radio, January 14, 2017, http://en.radiovaticana.va/news/2017/01/14/pope_francis_address_to_global_foundation_roundtable/1285625.

4. The Consumer Classroom, http://www.dolceta.eu/, has also outfitted itself with a valuable tool, lafinancepourtous.com, developed by the Institut pour l’éducation financière du public (Institute for public financial education), a general-interest group approved by the French Ministry of National Education.

5. Camdessus et al., Eau, p. 154.

6. Ibid., pp. 155–57.

7. Badré, “Un banquier dans la tourment.”

8. Carney, “Breaking the Tragedy of the Horizon.”

9. See Larry Fink quoted in Matt Turner, “Here Is the Letter the World’s Largest Investor, BlackRock CEO Larry Fink, Just Sent to CEOs Everywhere,” Business Insider, February 2, 2016, http://www.businessinsider.com/blackrock-ceo-larry-fink-letter-to-sp-500-ceos-2016-2.

10. Jean Favier, De l’or et des épices. Naissance de l’homme d’affaires au Moyen Âge (Gold and spices: The birth of the businessman in the Middle Ages) (Fayard, 1987).

11. Jean Favier, Les Grandes Découvertes. D’Alexandre à Magellan (The Age of Discovery: From Alexander to Magellan) (Fayard, 1991).

Chapter 10

1. Bruno Roche and Jay Jakub, Completing Capitalism: Heal Business to Heal the World (Berrett-Koehler Publishers, 2017).

2. Rym Ayadi, “Word from IRCCF Director, Professor Rym Ayadi,” International Research Centre on Cooperative Finance, accessed September 13, 2017, http://financecoop.hec.ca/en/research/.

3. Michael E. Porter and Mark R. Kramer, “Creating Shared Value,” Harvard Business Review, January–February 2011.

4. Shared Value Initiative, Banking on Shared Value: How Banks Profit by Rethinking Their Purpose (Foundation Strategy Group, 2014).

5. Some 2.5 billion people around the world are still excluded from access to quality banking services. Ibid.

6. See Social Impact Investment Taskforce, Impact Investment: The Invisible Heart of Markets. Harnessing the Power of Entrepreneurship, Innovation and Capital for Public Good (G8 under British leadership, September 15, 2014).

7. Original translation from Pilot Group on Innovative Funding, Comment encourager la philanthropie privée au service du développement? Étude sur les modèles émergents (Pilot Group on Innovative Funding, May 2012).

8. See Chapter 16.

9. Social Impact Investment Taskforce, Impact Investment.

10. “RFF’s Decision to Divest,” Rockefeller Family Fund, accessed 9/13/2017, http://www.rffund.org/divestment.

11. Carney, “Breaking the Tragedy of the Horizon.”

12. Ibid.

13. Original translation from Gérard Mestrallet, “Le prix du carbone, une boussole pour les entreprises,” Le Monde, April 16, 2015.

14. Camdessus et al., Eau, p. 143.

15. Ibid., pp. 194–95.

16. Groupe de Travail présidé par Jean-Pierre Landau, Les nouvelles contributions financières internationales (La documentation Française, n.d.), http://www.ladocumentationfrancaise.fr/var/storage/rapports-publics/044000440.pdf.

17. Original translation from “Financements innovants du développement: Les grandes étapes de la creation de la taxe de solidarité sur les billets d’avion et d’UNITAID,” foundation Chirac, http://www.fondationchirac.eu/wp-content/uploads/Financements-innovants.pdf.

18. Because of a mutual aid agreement signed by Jacques Chirac and Tony Blair, 10 percent of the proceeds of the Chirac tax went to this project.

19. Building quality traffic infrastructure is a different kind of problem, which is much more expensive and requires a different funding method. See Chapter 15.

Chapter 11

1. Nations Unies Assemblée générale, Nous, les peuples: le role des Nations Unies au XXIe siècle, Rapport du Secrétaire general (Nations Unies Assemblée general, 2000), http://www.un.org/fr/documents/view_doc.asp?symbol=A/54/2000.

2. The establishment of the World Bank goes back to the Bretton Woods Agreement, signed in 1944, which simultaneously created the IMF. Both institutions had the common goal of getting the global economy back on its feet, but they are entrusted with distinct roles: the IMF’s mission is international financial stability, while the World Bank’s mission is to aid development. Since 1944 the World Bank has expanded from a single institution to a group of five closely linked organizations: the International Bank for Reconstruction and Development, initially entrusted with supporting postwar reconstruction and development (hence its name), whose mandate is now to reduce poverty around the world along with its affiliated institution; the International Development Association; as well as the International Finance Corporation; the Multilateral Investment Guarantee Agency; and the International Centre for Settlement of Investment Disputes. These institutions are administered by the member states of the World Bank Group.

3. Élysée Palace is the official residence of the president of France and is referred to in much the same way as the White House is in the United States.

4. United Nations General Assembly, We the Peoples: The Role of the United Nations in the Twenty-first Century, Report of the Secretary-General (United Nations General Assembly, 2000), http://www.un.org/fr/documents/view_doc.asp?symbol+A/54/2000.

5. The G8 was abandoned after the annexation of Crimea by Russia in 2014.

6. The Brexit referendum may mean rerunning this analysis!

7. Such is the result of inclusive growth, as I was able to expound on recently during LVMH’s (Moët Hennessy Louis Vuitton SE) annual meeting, where I was invited to speak on the unlikely but ultimately inspiring theme of “Luxury and Development.”

8. See Bertrand Badré, “Quand la Banque mondiale soulève le couvercle des cultures” (When the World Bank lifts the lid off cultures), interview with Alain Henry, Le Débat 2015/3, no.185, pp. 185–90: “I have never seen an executive board that was as diverse as the one in which I participated today. Never! I was used to executive boards composed of graduates from French Polytechniques and Énarques: in short, white men, from the same schools, raised Catholic—and also with their own universalist bias. The Bank presents real cultural diversity. It is striking to be in the cafeteria here. You have the entire world at your feet. I don’t know anywhere else in the world where you could see the same thing.”

9. Ibid.

Chapter 12

1. A special tribute must be paid here to Gordon Brown, whose leadership at the G20 summit in London in 2009 was decisive.

2. From June 12 to July 27, 1933, the London Economic Conference gathered representatives from 66 countries determined to restart the global economy that had been seriously damaged in the 1929 crash and the devaluation of the British pound in 1931. The international agreement broke down on opposition from President Franklin D. Roosevelt, who had not even made the trip, to a currency exchange stabilization agreement, promoted specifically by France. The international monetary system founded on the gold system then collapsed, relaunching the global crisis.

3. In French “Depuis le temps que nous multiplions les rendez-vous galants, il est temps d’aller conclure au lit!”

4. I call this “P4C.” See Chapter 16.

5. http://news.xinhuanet.com/english/2016-05/22/c_135377957.htm

6. One way to monitor implementation of the 2030 Agenda for Sustainable Development would be for the G20 leaders to reconstitute the Development Working Group (DWG) within their sustainable development working group: an embodiment of the universal commitment to SDGs, this institutional innovation would strengthen the existing system for evaluating countries’ responsibilities—the G20’s Mutual Assessment Process, which tracks the various growth strategies and structural reform programs—by defining a set of priorities and guiding principles, and by relying on a voluntary statement by the countries of their progress, based on evidence and data.

7. MDBs include the African Development Bank, Asian Infrastructure Investment Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank, Islamic Development Bank, New Development Bank, and World Bank Group.

8. Badré, “Quand la Banque mondiale soulève le couvercle des cultures.”

9. “Chairman’s Statement—Global Infrastructure Forum 2016,” World Bank, April 16, 2016, http://www.worldbank.org/en/topic/publicprivatepartnerships/brief/chairmans-statement-global-infrastructure-forum-2016.

10. Carney, “Breaking the Tragedy of the Horizon.”

11. “Carbon Pricing: Building on the Momentum of the Paris Agreement,” World Bank, April 15, 2016, http://www.worldbank.org/en/news/feature/2016/04/15/carbon-pricing-building-on-the-momentum-of-the-paris-agreement.

Chapter 13

1. Concessional lending is a form of finance that is extended at very low rates (“concessional rates”) and that is free of the traditional collateral requirements of commercial banks and other lenders. Concessional loans offer borrowers a number of advantages related to guarantees and interest rates: when the former rates are low, or zero, or when the borrower receives a temporary relief or extension of repayments, the loan contains a “grant” element.

2. Since the creation of IDA, donor countries have contributed to raising over $250 billion, or close to 20 times the capital contribution of the International Bank for Reconstruction and Development, 100 times that of the International Finance Corporation (IFC), and more than 600 times that of the Multilateral Investment Guarantee Agency.

3. This number compares to $65 billion for the IFC, International Bank for Reconstruction and Development, and Multilateral Investment Guarantee Agency combined. Even though these funds are not exactly the same in nature, it shows that donors have provided a significant amount in a few decades.

4. For more on pandemics, see Chapter 5.

5. All MDBs are rated. One of the key points considered by ratings agencies is the level of concentration of exposure of these institutions in their credit portfolios. By nature, given the limited number of sovereign counterparts, all the MDBs have concentrated portfolios. This is, of course, not totally comparable to various concentration ratios used by commercial banks, but there are similarities. Coverage methods also cannot be applied in the same manner. Hence the idea is to turn to derivative products and to realize transactions implicating different banks exchanging some of their exposure in a synthetic manner.

Chapter 14

1. On philanthropic groups, see Matthew Bishop and Michael Green, Philanthrocapitalism (Bloomsbury Publishing, 2008).

2. If I am concentrating on the World Bank Group here, it is because that is where I gained my experience. The analysis could be applied to most MDBs: its model differs due to its cost base (the cost–revenue ratio of the World Bank is substantially higher, in part because the bank must take global public goods into account) or even the relative importance granted to public or private sector engagement, but these institutions have many things in common, in particular their mission and status.

3. Spillover and spillback effects measure the effects of a decision of one country on the other countries and vice versa.

4. Their margins are dozens of basis points, or 0.1 percent, compared to hundreds of basis points for the former, or several percent.

5. See Development Committee, From Billions to Trillions: “Domestic Resource Mobilization (DRM) has become more and more key to financing national development plans. Taking positive growth trends into account, the DRM of emerging and developing economies totaled 7.7 trillion dollars in 2012. In other words, the treasuries of developing countries now receive over 6 trillion additional dollars each year, compared with in 2000, thereby helping to reduce their dependence on aid and improving the solvency of many countries.” 

6. See Ibid.: “Financing the investments needed to reach SDGs will require the international community to adjust its scale from billions in public development aid to trillions in all kinds of investments: human and material, and using public and private, national and international sourcing. In fact, SDGs require each dollar donated to be used as wisely as possible, starting with the 135 billion dollars in public development aid. But this also concerns individual donations, migrants’ remittances, South-South flows, other forms of public aid, and direct foreign investments. To reach the expected levels, two other major financing sources must be mobilized: the internal resources of each country, as that is where most of the development expenses are, and financing and private investor financing with a real potential to obtain additional funds.”

7. See Camdessus et al., Eau, p. 205: Guarantees “can take different forms but, ultimately, they are all the same thing: an institution outside a project provides a guarantee that enables the project developers to face a specific risk that exceeds their current financial standing and makes it possible to finance a project or decrease its costs.”

8. The need for adjustment was less pronounced at IFC—which had recently suffered from a more hostile environment, as expected—or at MIGA: from the point of view of the financial model, these institutions were more advanced, in particular because of their closer ties to the private sector.

9. It has become a self-fulfilling prophecy to IBRD, particularly, which was faced with the risk of seeing its annual commitment of $15 billion start to decline.

10. Again, this observation applies less to IFC and MIGA.

11. A bank must be profitable even if your system is made more complex because of instruments such as trust funds.

12. Development Committee, From Billions to Trillion. 

13. This includes syndication of B loans, fund-raising by its Asset Management Company subsidiary (equity), or even Managed Co-Lending Portfolio Program (this relates to debt) loans, more recent and innovative loans, which involve working with external investors. Intelligently combined, both approaches pave the way to a systematic mobilization effort.

14. See the Doing Business report published each year by the World Bank.

15. See Camdessus et al., Eau, p. 209. 

16. Ibid: “The establishment of financial markets is not a place for improvisation. It is a field par excellence where the technical assistance of advanced countries saves precious time and avoids initial errors, which can accelerate training of local actors and adoption of operating regulations which have been proven elsewhere in terms of discipline, transparency, liquidity, equality of access, etc.”

17. One way to develop financial markets in emerging countries lies in “offshore” sale of bonds denominated in national currency to national and international investors.

Chapter 15

1. Camdessus et al., Eau, pp. 153–54.

2. Ibid., Eau, pp. 227–28.

3. Ibid., p. 234.

4. Ibid., pp. 235–36.

5. https://ppp.worldbank.org/public-private-partnership/library/ppp-massive-open-online-course-how-can-ppps-deliver-better-services

6. de Villepin’s speech on February 14, 2003, addressing the responsibilities and implications of the Iraq crisis, received a standing ovation. Transcript: “Statement by France to Security Council,” New York Times, February 14, 2003, http://www.nytimes.com/2003/02/14/international/middleeast/statement-by-france-to-security-council.html.

7. Groupe de Travail présidé par Jean-Pierre Landau, Les nouvelles contributions financières internationales (La documentation Française, n.d.), http://www.ladocumentationfrancaise.fr/var/storage/rapports-publics/044000440.pdf.

8. Camdessus, Le sursaut.

Chapter 16

1. Syndication is a technique that allows a bank to share a loan with other financial institutions and hence diminish the impact on its own balance sheet.

2. Development Committee, From Billions to Trillions.

3. Ibid.

4. Ibid.

5. Established within the support framework of the G20 to the Global Infrastructure Initiative (a multiyear program to improve the quality of public and private investment in infrastructure), the Global Infrastructure Hub, based in Sydney and given a four-year mandate, was conceived as the neutral center for the program. Its goal is to encourage cooperation and information exchange among all actors—governments, the private sector, development banks, and international organizations—in order to improve the function and financing of the infrastructure market.

6. I am now the honorary chairman of this platform, which is a joint venture between the World Economic Forum and the OECD, sponsored by the Swedish International Development Cooperation Agency and USAID, as well as Citibank and Sumitomo Mitsui Banking Corporation. It brings together bilateral and multilateral agencies, banks, investors, sponsors, and NGOs, to name a few.

7. The Coletivo initiative launched by Coca-Cola Brazil is the example par excellence of the shared-value approach. Through this project, designed in collaboration with local NGOs, the company gave two months of sales training to a few thousand troubled teens, giving them a springboard to landing their first jobs. At the same time, these young people contributed to selling more sodas in stores where they did their internships and were asked to reflect on ways to improve stock management, promotions, marketing, and more. The investment yielded a profit within two years. By rigorously measuring these results, the subsidiary was able to convince the parent company to extend the pilot project to more than 150 low-income communities around Brazil. More than 50,000 youths received training through Coletivo, and 30 percent of them landed their first job working for Coca-Cola or its partners.

8. The Danone Communities initiative had its beginnings in a meeting between Franck Riboud, CEO of Danone, and Muhammad Yunus, president of the Grameen microcredit bank and Nobel Peace Prize recipient in 2006. Strengthened by their common convictions and complementary skill sets, they decided to join forces to found a new company, Grameen Danone Foods. The goal was to create a yogurt factory in Bangladesh that was profitable enough to stay in business while also contributing to local development. Taking it a step further, Danone decided to fit it out with an innovative financial tool, open to everyone and created to encourage the development of social business initiatives: danone.communities. Launched in 2007, this open-end mutual fund, managed and marketed by Crédit Agricole, had a pathway marked out: to develop Grameen Danone Foods by building other factories in Bangladesh; to aid the development in other parts of the world (in Senegal and Cambodia today, for instance) of other social business enterprises consistent with Danone’s mission; to develop partnerships with other local actors or NGOs through the original business model; and to bring together through the Danone Communities all those who contribute to the project, including investors interested in giving a sense of solidarity to their portfolios.

9. The Sustainable Banking Network launched following the first international forum on green credit (the International Green Credit Forum), organized jointly by the IFC and the China Banking Regulatory Commission in Beijing in May 2012. For more, see, for example, “Sustainable Banking Network,” IFC, accessed September 15, 2017, http://www.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_Site/IFC+Sustainability/Partnerships/Susatainable+Banking+Network/.

10. Development Committee, From Billions to Trillions: “In 2013, MDBs committed more than 28 billion dollars to encourage climate action in developing and emerging economies, which brings the total commitments in the last four years to over 100 billion dollars.”

11. Camdessus et al., Eau, pp. 143–44.

12. Ibid., pp. 147–48.

13. Ibid., pp. 247–48.

14. Ibid., p. 248.

15. Ibid., pp. 187–88.

16. The main island, Guadalcanal, was the theater of the famous battle in 1942–1943 between the Japanese and Americans, immortalized by Terrence Malick in his 1998 film The Thin Red Line.

17. Having completed my own military service in Polynesia, I remember missions intended to prevent Taiwanese, Korean, and Japanese trawlers from stockpiling fish from French territorial waters.

18. The tuna packing plant received a loan in 2013 of $10 million backed by the IFC, specifically to finance the acquisition of new equipment (cold chambers, improved housing for employees, etc.). For more, see, for example, “Saving Tuna: IFC Provides $10 Million Loan to Soltuna in Solomon Islands,” IFC, accessed September 14, 2017, http://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_external_corporate_site/news+and+events/news/ifc+provides+%2410+million+loan+to+soltuna+in+solomon+islands.

19. To reach Honiara from Australia, it takes a multi-hour flight, then another two-hour flight, then an hour by car to reach the factory.

Conclusion

1. For more, see Thomas Friedman, The World Is Flat (Farrar, Straus, and Giroux, 2005).

2. Jean Giraudoux, Tiger at the Gates, trans. Christopher Fry (Oxford University Press, 1955).

3. Camdessus et al., Eau, p. 115.