June 25, 2012 | Washington, DC | Women Shaping the Global Economy
International Financial Diplomacy
Lael Brainard, Under Secretary of the Treasury for International Affairs

Honorary Committee | Photos | Podcast | Press | Sponsors | Transcript

Washington, DC—On June 25, 2012, Lael Brainard, Under Secretary of the Treasury for International Affairs, addressed WFPG on "International Financial Diplomacy" at a Women Shaping the Global Economy event moderated by Chrystia Freeland, editor of Thomson Reuters Digital. Her remarks covered the importance of the new field of international financial diplomacy, the need for immediate resolution of the euro-zone crisis, the American role in the process, and the importance and challenges of US–China economic relations.

At the luncheon, Brainard described her responsibilities as one of America's primary international negotiators in finance. Her role is relatively new in the field of diplomacy—whereas the word 'diplomat' brings to mind such clandestine operations as Henry Kissenger's trip to China in 1971, finance ministers once acted solely in the domestic arena. When economic policies were local, there was no need for her position, but today it has become indispensible since, as she noted, "policies designed for domestic circumstances can matter as much or more to other countries as any international treaty." Today she is the US Treasury Department's point person for international economic policy and has been involved in economic negotiations all over the world, from the Strategic and Economic Dialogue in China to the Los Cabos meeting of the G-20, where she served as G-20 deputy. The US has also been an active participant in European negotiations, despite criticism of it for its role in causing the global recession. Brainard asserted that America’s "power is not primarily from our purse but from our ideas, our intensity, and our initiative." As a result, the US has still been welcomed to the negotiating table and there has encouraged the integration of European banking systems, including joint fiscal, financial, and political architecture. On Greece, Brainard said that the country requires urgent reform, and its government has only recently demonstrated commitment to making necessary changes. Brainard maintained that with immediate action "these challenges are manageable," and that the timeline for the Greek recovery was somewhat flexible, though weaknesses in Spain’s banking system require a swift response. She said that keeping borrowing costs for European countries low and ensuring that banks have access to loans were both sources of financial stress, though she did not commit to a particular design for firewalls to keep such economic problems contained. She also discussed the possibility of Europe lending directly to troubled banks rather than to sovereigns without committing to such a design.

According to Brainard, no conversation about international financial diplomacy could be complete without discussing the challenges and potential in US economic policy towards China. The Under Secretary, who participated in the recent United States–China Strategic and Economic Dialogue, said, "We have sought to shape the policy choices facing Chinese financial authorities to increase their consistency with international standards and norms and to create a more level playing field." China may rely too heavily on resource-intensive export industries, devote insufficient efforts to trademark protection, and undervalue its exchange rate, but there has been progress as well. The yuan has appreciated against the dollar during Brainard’s time in office and tax and tariff policies were recently updated to make foreign goods more competitive in China. China is and will remain a key focus of American international financial diplomacy.

When asked about the issue of work–life balance Brainard responded that she did not usually discuss her private life, but that she loves both her work and her family and is thankful that technology allows her to stay in touch with her husband and three daughters while traveling. Although four of the countries in the G-20 are led by women and four boast women foreign ministers, only one has a woman finance minister. Brainard also mentioned that she is the only woman deputy from a G-20 finance ministry. In her words, "the world of financial diplomacy could use a few more good women."