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00:00First of all how do we view the big tech companies. What needsto happen for them to feel maybe a little bit safer than they are right now.Well I think you're in a much different scene to having your program. We have the problem in the last decade. One of the mostsignificant developments both in technology and the financial markets is a very rapid entrance of big tech into financialmarkets. What is so salient about these is the speed at which they have developed their footprint. Basically they are thetechnology they use allows them to induce major network effects to to gain market power extremely quickly. And they we have tobe very frank. These developments were much weaker than what we realized. And in terms of regulation we are falling behind it.At least three key aspects that need to be regulated. One is precisely the issue of competition. Second is to. These areissues related to the use use such of data. And the third are different aspects that could a Covid financial stability angle.So it was regarded garden of course Google doesn't have the same approach when it comes to finance. For example Amazon or anytech firms you think directly looking to rival banks. Or excuse me to write one.I think the last point our rival banks. Yes I am. Well you know the thing is out there many of them are starting making inroadsinto payment systems and some are contemplating the issuance of stable stable coins now. Payment payment systems easy is theeasiest way to France enter into financial markets. Now what is key about it is that it establishes a very easy and rapidrelationship between the client the household and the firm and the company. What also happens with payments is that itgenerates huge amounts of debt. Now if you combine that off the payment system with that that for example of a of the networkthey have let's say in their social platform you get tremendous amount of information. And that allows them to develop extremelyquickly. So that can certainly a affect is some of the key businesses that banks use to lend not book the production of adeposit and also the capacity of Lent on a based on a relatively stable platform offered deposits. So yes if it is not dead. Ourconcern is not so much that we need to protect banks privacy but more than anything we have to provide a level playing field. Andthat is the key issue here. But Mr. Carson can you define what you're seeing that big techdo. Is it cooperation with banks. Is it competition. Competition with banks. And again what does that mean for example from thecrypto platforms. It mostly is competition is competition. A for example competegreat commercial banks have a very strict limits to the use of that that even that that of their clients they have that doesn'tapply. For example for Big Tex when they develop financial practices. So that's one. One key issue a big DAX when they goto finance they're not subject to the same regulation that we subject banks to for example. They don't need to hold capital.Oftentimes they don't have any liquidity requirements. Any lever actually limits. A way they're incorporated as a firm is verydifferent. So we have seen already some developments in some parts of theworld where these different a way of treating a similar business it can really affect a incumbents.What about Mr. Your about the global picture. Is our Chinese tech companies much more advanced at being challenger banks.That what we're seeing here. Yes. I mean I think what has been happening during the last ayear or so at least during the last year in China Isa it's a weak. It's a clear example of what can happen. I mean certainlya the two major payment systems run by Alibaba and by Tencent is run extremely quickly. They are basically a now a dominate 94percent of the payment in China. And they started to do financial intermediation to the point that the attraction ofdeposits was extremely and our resources was extremely fast and significant in terms of volume. And that presented its ownfinancial stability risks. Mr. Carson where do you see and feel when you look at thefinancial or systemic risks out there. Is China something of concern because of ever ground or will it be actually heldtogether somehow. How do you see that risk. Well I think I mean it is needless to say every grant is as wesay in Spanish is very grandiose or just very big. Now that that basically means thatit certainly can have an impact in the Chinese economy. But given the business model it has I think it's contained. I thinkthat the Chinese health authorities have the different instruments to deal with it. So I think it's a big wake up call.The important wake up call about the you know how different types of financial intermediation oftentimes are hidden behindsome business models and that can represent the risk. So it's a big it's important. It has to be taken care of. But I don'tthink it represents a systemic risk. Do you worry about energy prices. And again your main concernactually facing central banks is what do you do with inflation. Is it transitory or everyday where there is a new record withenergy prices. Certainly in Europe just transitory become something of a myth.Well I mean energy prices traditionally are very very volatile. And yes they will be affecting markets. I think that thissituation has been compounded by the fact that a as we get out of Covid-19 A there has been many markets that have beendisrupted many supply chains including the once in energy and a that has made there at the moment a more difficult but this hardto believe that this issue will not be in some way or another and mitigated. I think that a volatility in prices to to energyare very common. I mean I come from Mexico and this is something that happens quite frequently.So I mean definitely the central banks need to be very watchful. They need to send the right signals so that you know secondfront effects are not produced by these increases. But otherwise these are relative prices very important relative price changes.They will affect measured inflation but they should not affect the dynamics of inflation into the medium and long term.So not even supply chains. Again supply chain concerns have actually lasted longer than we thought they would. Is there arisk that central banks are just getting it wrong. Well you know the thing is out there. We are learning a lotabout in this period. I mean we had an unprecedented exercise last year to is to freeze the pretty much the global economy itthrough policies. We brought market to stand still and suddenly we're opening them all up. Activity coming down is back. Butwhat is very hard to respect is that the both Covid or the way out of Covid will will imply a. A. I would say they really needa true genius. Seemed less a behavior in the different markets. So we will be seen several hundred disruptions many treesdisruptions in the months to come. It's not it's not that there is a major macro or a monetary problem. There is just the factthat if are there the markets need need need to adjust it. So what I believe is that is that a a we need to sit through thesein ISE. I don't think it would help the global economy or abate by the way your national economy to trade through monetarypolicy for example to reduce the price of other all of goods and services that are not affected by the supply chains tocompensate increasing prices in the supply chain. I don't think that would be good for the recovery. Therefore on their sidethere really is a change in the dynamics of inflation. In second round effects are pressing. I think monetary policy has tocontinue the way it has been happening the last three months. Mr Carstens. Finally I also want to ask you about green finance.Is there a danger that we're creating a green asset price bubble. And if we're not creating it how do we make sure that itdoesn't come to fruition. Well there is a quote. There is a lot of appetite for these typeof instruments for ESG type of instrument. I think that's very positive. What we make to make what we need to make sure iswhat. D D E as G label will really generate the effects on the environment that we are looking for and they as long as we don'thave in other quit taxonomy. We don't have enough information. We cannot make sure that whatever. A for example a companypromises in terms of these broader objectives are really targeted and really complied with. At some point we might findsurprises down the road. So I don't think this is say in imminent crisis or an imminent problem. But this is morebasically what we have been trying to do is to raise our voice that we need to start working today in a very decisive way toavoid the problems down the road.

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BIS's Carstens on Big Tech, Evergrande, Inflation

Bank for International Settlements General Manager Agustin Carstens discusses regulating big tech, the problems facing developer China Evergrande Group, and inflation concerns. He speaks on "Bloomberg Surveillance Early Edition." (Source: Bloomberg)