We introduce that decibels is used to express a ratio between two levels. We're dealing with power levels and A ratio for example between two power levels is just one power level divided by the other If we want to express that ratio in decibels, then we take the logarithm in base 10 and then multiply by 10 so if one power level is ten times or is One power level is a hundred times greater than another than that ratio is a hundred to one Or one is a hundred times bigger so that the ratio or the factor is one hundred there There are no units there But we can also express that in db. We have a hundred log of a hundred is two times by ten We get twenty db so we can say one power level is twenty db greater than the other and we spoke about We introduce the concept of gain and then finish with loss. So let's go back to our example from last lecture We had a simple example of an amplifier take some signal input and produces some signal out and we can measure the power levels of those signals and Would say the input signal has power P in and the output signal has power P out an Amplifier we know should amplify the signal the output should be larger than the input but we can measure that and we can Specify a characteristic of that amplifier being by how much larger the gain So what we did is we gave some values if the input was one watt and the output was let's say a more nicer example if the output was two watts Then the output is two times larger than the input. So we say the gain of that amplifiers to a factor of two There are no units. It's not two watts two seconds. It's two two times but we can also express that factor as In a logarithmic scale that is in decibels We take two we log by ten and log of two is about zero point three Zero point three times ten gives us about three So a factor of two is the same as 3db three decibels What's the units here 3db? There are no units don't be confused db is not a unit It's just really think of specifying a scale Convert to with no units into another quantity That quantity doesn't have units as well So even though we write the letters db after three, it's not like three seconds three meters three watts Where seconds meters and watts are units. They're measuring some quantity Db is not a unit. It's just indicating the scale. We're using So we can convert to db and we saw a very nice one to remember We double something a factor of two Approximately 3db not exactly. We're about 3db You have something You reduce it by a factor of two then you reduce it by a factor of about 3db So 3db is nice to remember because we often double or half something and The properties or logarithms is such that if we have a factor of two and we double it again to a factor of four Then that's the same as taking our 3db and adding another 3db Giving a 6db. So a gain of a factor of four is the same as about six decibels A gain of 10 is 10db and we saw some other values. So just some example values a nice thing about using decibels is even when we have very large Factors here in decibels. It's only a small number a million is 60db a billion is 90db So we're dealing with smaller numbers and Then finally we mentioned at the end loss Gain is when we increase something losses when we decrease that the inverse of each other So if we had a Trans a transmit power of one watt and a receive power of 0.1 watts We start with one we end up with a smaller value Well the same way as before the gain is 0.1 Output divided by input The input is zero point one time. Sorry the output is zero point one times the input So the gain is zero point one the log of zero point one Minus one times by ten gives us minus 10db. So we say the gain in this case is minus 10db But we can also think of that same quantity as a loss We started with one watt. We ended up with zero point one watts We have reduced by a factor of ten So we can say in this same case the loss is a factor of ten The output is ten times smaller than the input Or the output is zero point one times larger than the input. It's the same a loss of ten The output is ten times smaller than the input take the logarithm of ten. We get one times by ten. We get ten db These four values a gain of point one a loss of ten or a gain of minus ten db a loss of ten db are all the same They all express the same quantity Just using different approaches When we're using that the the factor the gain a loss of One divided by each other the inverse one divided by zero point one gives us the loss of ten One divided by the loss gives us the gain When we're using decibels the properties of logarithms instead of divide and Multiply we get subtract and add additions. So a Gain of minus ten db the equivalent loss is plus ten db a Gain of minus 50 db the equivalent loss is plus 50 db so they're the inverse in that they're additive in the inverse in this case and Another benefit of using db is that when we do operations of Sequential operations then we do addition and subtraction and Addition and subtraction is easier than multiplying and dividing when we use the factors So let's continue with a different Maybe example that will again use db and introduce some new concepts But before we do that any questions on the example from yesterday You should be able to convert a Factor or a ratio to db just take the logarithm in base 10 multiply by 10 and convert backwards Given 20 db convert back to 100 What do you do 20 db take 20 divide by 10 gives us two and Ten to the power of two gives us 100. So remember how to do both ways Let's consider another example. Let's consider our audio system that we use in this lecture room so when I speak I generate a signal and Eventually it gets to your ears But in fact if we think about the audio system that goes through multiple components when I speak The audio signal comes out of our mouth that goes to the microphone The microphone sends a signal down this wire and in my pocket. There's this wireless transmitter Okay, it goes to this box This box sends a signal wirelessly to if you look on the desk There's a box here with some antennas that receives the signal That sends a signal to an amplifier in the cabinet here the amplifier Amplifier amplifies the signal Increases it. We have a gain sends a signal up to these speakers on the walls And then it goes down through the air to your ears So we'll draw that and we'll put some numbers to that as to some examples of what is the gain and loss of each component and look at the receive power I'll try and draw that and to represent what we have So we have the transmitter We start with me standing here and I speak and it goes to the microphone. We'll have to squeeze it in Here's the microphone and The microphone is connected to this transmitter in my pocket And then it goes wirelessly to some box on the desk That's the wireless receiver on the desk And that has a cable to an amplifier and that amplifier has cables to the speakers and Then here you are With your ears that's going to receive that signal. So we have different components in this communication system Let me make up some numbers to Indicate the loss and gain of some of those components and when I say make up I'm going to just choose some numbers that Easy for me to calculate. They may not be so realistic. Okay, we don't Not too concerned about being realistic here. I just want to show some example calculations when I talk I create a Sound out of my mouth and then we can think that sound has some signal strength some strength How do we measure sound? Usually we think about sound pressure There's some pressure But let's to make it easier to cheat a little bit and say that the the sound that comes out of my mouth has some signal strength measured in watts some transmit power So I'll make up a number and say we transmit it about What When I transmit With some power PT Let's say it's 10 micro watts That's what we start with coming out of my mouth Now that's not realistic again. That is we cheated it should be a measure of pressure or microwatts per area when the Audio comes out of my mouth that goes to the microphone And then the few centimeters and then it travels along this cable to the transmitter in my pocket so from this point to this point if we measured the power at the wireless transmitter here would it be greater than Equal to or less than 10 microwatts Between my mouth where it starts at 10 microwatts goes to the microphone and then to the device in my pocket The power level at the device in my pocket will be will it be greater than equal to or less than 10 microwatts Hands up for greater than Hands up for equal to the same as Hands up for I don't know Hands up for less than All right, let's try a different one. Everyone put your hand up. See if your arms are working today Everyone okay now put your hand down if you think is put your hand up Put your hand down if you think it's less than That is the receive power here is less than the transmitter power Hand down put your hand down. It's less than Why well we know of an impairment called attenuation when I transmit a signal When it travels some distance that signal attenuates always So I transmit a signal if you measure it coming out of our mouth to be 10 microwatts When it hits the microphone, it's going to be less than 10 microwatts because over that five centimeters The signal has got smaller. It's attenuated and As that signal travels from the microphone through the cable to the transmitter. It also attenuates it gets smaller Okay, so whenever a signal travels some distance it gets weaker So it's always going to be less than what it started out as and Unless there's some component in there that amplifies Well, let's this is not amplifying at this stage. So let's assume it Just loses power. So we'll denote Between my mouth and the wireless transmitter, I'll give it a value by how much does it get weaker by let's say So we'll actually have a loss between here and here and I'm going to make I'm going to make up a value Not so realistic but easy to calculate and we say the loss is a factor of true Instead of me writing a loss of two, I'll write divide by two With a loss we start with a power The receive power will be less than by how much by a factor of two. So effectively we divide by two in other words if I transmit at 10 microwatts if the loss is a factor of two then at this point I'd receive at five microwatts It's reduced by a factor of two Let's consider the other components Between the wireless transmitter and the wireless receiver on the desk. There's also some loss The signal needs to travel through the air as it propagates through some distance. It gets weaker and Let's say I just put some nice numbers in here. It loses by a factor of 10 Across this link here will be 10 times smaller than it was at this point from the wireless transmitter to the Amplifier, there's some cabling and there's a small loss across that cable And I'll put it to be a loss of 1.6 Be 1.6 times smaller across this link The amplifier is our component that introduces a gain It amplifies It will take an input signal whatever comes in and the output should be should be bigger So I'll say that the gain of the amplifier and I'll make one up is 1,000 and I write that as multiply What that means is this amplifier takes a signal with some power in P in P out would be 1,000 times larger than P in If the input is one watt the output is a thousand watts if the input is one Millie watt the output is 1,000 milliwatts. That's all the gain of 1,000 we multiply by 1,000 It sends a signal to the speakers on the walls and let's say the the loss across the cable is also 1.6 There's not no real no reality in these numbers here I've just chosen them so that they'll be easy to calculate and then From the speakers to your ears. Let's say there's also a loss as the signal gets weaker of a factor of 10 what we want to know if that's the system What power do your ears receive the signal at if I transmit at 10 microwatts? What do you receive? Calculate it There's nothing to do with DB yet. This is just a calculation of gains and losses How would you calculate it? Well? Start with 10 microwatts divide by 2 the first loss we reduce it by a factor of 2 It'll be down to 5 then divide by 10 because that five microwatts is then reduced by a factor of 10 The next number divide by 1.6 then times by 1,000 and then continue and what's Received at your ears is the value that you get it when you calculate we start with 10 we divide by 2 Then the next stage we divide by 10 we reduce by another factor of 10 and Then a factor of 1.6 Then we times by 1,000 increase Divide by 1.6 Then to your ears a factor of 10 and that should give us the receive power 19.53 Microwatts the units we were using there as Microwatts we started with 10 we end up with 19.53 or about 20 about 20 microwatts This is a you or a mu the Greek letter mu. It's not an M. Just be careful with my writing micro Micro is 10 to the power of minus 6 Now let's do that again, but use decibels Exact same calculation, but with a different scale We said the first component had a loss of a factor of 2 convert that to db 2 How many db is 2? we 3 right that's a good one to remember half We reduced by 3 db Why is it 3 or about 3 log of 2 is 0.3 times by 10 gives us about 3 You can use your calculator, but Let's approximate and say that this component 2 is equivalent to 3 db and instead of me writing a loss Similar to where I wrote divide well, we can think where we lose 3 db It's actually a gain of minus 3 db a factor of 10 convert to db log of 10 is 1 times by 10 Gives us simply 10 db 1.6 the reason I chose 1.6 is because it converts to about 2 db log of 1.6 Times by 10 is about 2 so 2 db For the next value. We're going to lose 2 db our Amplification by a factor of 1,000 how many db calculate log of a thousand 3 We're doing log base 10 here 3 times 10 30 db Not negative. It's plus. That's a our gain. So we go up in that case Divide by 1.6 again is another minus 2 db and Divide by 10 another minus 10 db. So we start with 10 micro watts and those components of loss and gain we can measure them as 3 db or a Gain of minus 3 db or a loss of 3 db, whichever way you want to look at it a Gain of minus 10 db a gain of minus 2 db a gain of 30 db a negative gain is a loss a Loss of 2 db a loss of 10 db and we would what we could do is And I will not do it. We'll do another step first what we could do is say okay the total system Gain or loss is just the summation of those components Minus 3 minus 10 so we have minus 13 minus 15 Plus 30 brings us up to 15 db Minus 2 is down to 13 db Minus 10 is 3 db The total gain in this system is the summation of the component gains Which is 3 db if you add up those numbers you get 3 So does that make sense? Well we transmit at 10 micro watts The total gain is 3 db 3 db is equivalent to a factor of 2 We start with 10 micro watts. We gain by a factor of 2. We should end up with 20 micro watts. All right, that's what we calculated before so Sometimes dealing in db is easier because instead of dividing and multiplying on my calculator I can add and subtract in my head and find this is 3 db Which is equivalent to a factor of 2 If we consider all of those components if we add them all up we end up with a Total gain or a system gain of 3 db or a factor of 2 We convert back that becomes a factor of 2 So if our system gain is 2 then we start with 10 then we must end up with 20 and that makes sense with our previous Calculation that's what we got So it's just a different approach to do the same problem any questions on that Conversion to db don't get confused between gain and loss Okay, be aware when we're talking about one or the other now the next part is the new part Which is confusing for some people so any questions on db so far no questions good Remember we're using db to indicate a Ratio between two power levels one divided by another But just express it on a logarithmic scale It turns out we can also use this decibel or logarithmic scale to express a ratio of say our transmit power 10 microwatts Relative to some reference point so we'll introduce a new concept and let's say We want to compare two power levels, but we'll fix one of them We'll fix one to a reference point It's always the same and that will allow us to compare the other to that reference point So let's do that by our example then and come back to signif explain the significance of it Let's say we have a reference point of 1 watt we want to compare power levels to 1 watt remember the gain is One power level divided by another Let's fix This power level to be one watt always and That will allow us to compare some other power level to one watt So if our reference is one watt, let's consider our transmit power PT and Let's consider on a logarithmic scale What do we got we have ten log base ten of The actual power level ten microwatts Relative to our reference point of one watt we had a transmit power of ten microwatts We can also write that using DB on a logarithmic scale, and this is how we do it We compare that ten microwatts to our reference point of one watt Simply ten micro de watts divided by one watt. What's the answer of this? Here's when you need to remember your prefixes Micro is ten to the minus six Ten times ten to the minus six is ten to the minus five Ten to the power of minus five watts divided by one watt The watts cancel out One we divide by one we end up with ten to the power of minus five log in base ten of ten to the power of minus five is minus five times by ten Minus five times ten minus fifty, so you can check that Log in base ten of ten to the minus five is simply minus five Times by ten we get minus fifty. Here's the new thing DB. We've converted to DB That's the ten log part Instead of writing ten minus fifty DB with a reference of one watt We write W here DBW meaning our transmit power of ten microwatts is minus fifty DB Greater than one watt the W refers to one watt here, so We often use one watt as a reference point to express in a single power level But sometimes we use a different reference point Another one that we will commonly see is one milliwatt So let's do the same again same transmit power, but compare it to one milliwatt That is how does ten microwatts compare to one milliwatt and on our logarithmic scale ten log base ten What was our power level? Same again ten microwatts Divided by our reference point, which is now one milliwatt ten micro We said was ten to the power of minus five watts We need to have the same prefix to be able to do the division. Let's convert it just to simply watts One milliwatt is ten to the power of minus three watts Ten to the power of minus five divided by ten to the power of minus three. What do we get? Ten to the power of minus two Log of that gives us minus two times by ten minus twenty DB Reference point is no longer a watt the reference point is a milliwatt. So instead of writing DBW we write DBMW everyone following So this is not simply decibels. It's decibels Reference to a particular value and Instead of me saying always reference point one watt or reference point one milliwatt. We write it here minus 50 DB referred to one watt or in this example Minus 20 DB reference to one milliwatt. So we write DBMW here, but here's the trick We're lazy sometimes instead of writing DBMW We leave off the W and you'll see it just DBM. So that's the confusing part for some people. We should write DBMW, but many people will not write that W And it looks like DB meters, but it's not that M there refers to milliwatts and that's the common Notation that you'll see in practice. What does all this mean? We started with a transmit power We said it was 10 microwatts. We could also write that as minus 50 DBW Decibels minus 50 decibels relative to one watt or it's the same as minus 20 decibels Relative to one milliwatt M for milliwatt They're the same numbers same values just on different scales and It turns out in communication systems often DBW and DBM are used Because in many communication systems the power levels are either very big or very very small so in Wi-Fi the received power Maybe nanowatts a very small value Converting it to DBM makes it a nice value like minus 70 or something So often if you buy a wireless transmitter or receiver in The specs they'll specify the transmit and receive power and they'll be expressed in DBM or sometimes DBW Not in watts milliwatts and microwatts So it's important to know that any questions on converting one power level To DBW or to DBM then convert 20 microwatts. What was the received power in our case? With the first question the received power we've determined was 20 microwatts Convert that to DBW and DBM that is do the conversion, but PR equals 20 microwatts Remember from our original calculation. We determined PR is 20 microwatts What is it in DBW? DBM you may need your calculator to find the DBW equivalent divide it by one watt and Then logarithm times by 10 Here's a chance to use your phone instead of playing games and browsing the web in the lecture then use your phone to as a calculator we have 20 micro divided by one and Then log and times by 10 anyone have an answer 20 micro was logarithm of 20 by 10 to the minus 6 and In in exams I always allow you to use your calculator But no phones of course, so make sure you do have a calculator By the time the mid-term exam comes Anyone get an answer? We're going to have 20 micro is that right 20 by 10 to the power of minus 6 is the 20 microwatts and We need to take the logarithm of that because when we divide by one watt it becomes that value and then times by 10 about minus 47 DBW and in DBM we have 20 microwatts Divider by one milli watt Take the logarithm times by 10 What do you get? You'll calculate and you'll get about minus 17 DBM. Why do I know that? Look at the difference between DBW and DBM We have the same power level to calculate DBW. It's derived by one watt To calculate DBM it's divided by one milli watt There's a 1000 times difference there from one watt down to one milli watt So a factor of 1000 log of 1000 is 3 times by 10 is 30 DB difference So there's always 30 DB difference between DBW and DBM To convert you can add 30 DB Minus 50 plus 30 is minus 20 minus 47 plus 30's minus 17 Now you can calculate the the manual way or you can remember the difference between the two The other thing that we see We went from 10 microwatts up to 20 microwatts. We doubled We have an increase of a factor of two or an increase of 3 DB Minus 50 DBW plus 3 DB minus 47 Minus 20 DBM plus 3 DB minus 17 DBM So multiplying by two is the same as adding 3 DB The last thing in this example coming back to our Total gain Remember the components we had minus 3 DB minus 10 and so on let's write them again We start with Let's do it in DBM. We started with a transmit power of minus 20 DBM that was the starting point then we had a loss of 3 DB Then the next component was a loss of 10 DB then a loss of 2 DB then we had a gain of 30 DB Then a loss of 2 DB. So this is just from the top example and Then a loss of 10 DB What do we end up with add them up? So these are from the the losses and gains from our audio system But we started with a transmit power of minus 20 DBM What do we end up with a received power of? minus 20 and Here's the trick which confuses people remember DB is not a unit Decibels is not a unit. It's not like meters or seconds. So we can add these up so Don't be confused by seeing DB here and DBM here. Do we need to convert them?  You're too fast for me. Good Minus 35 plus 30 we get up to minus five Minus seven minus 17, correct minus 17 watt not watts minus 17 DBM Relative to one milliwatt. So the answer of our received power is minus 17 DBM Well, that's what we expected. We said minus 17 DBM is the same as 20 microwatts when we calculated the very first way We ended up with 20 microwatts. So it's the same just a different approach The point is that when we know the component gains and losses in DB and If we know the transmit power in DBM or DBW It's very easy to find the received power. Just add and subtract As opposed to multiplying and dividing and many communication systems are analyzed in that way minus 17 DBM Is the same as our first answer 20 microwatts


Okay, let's do this problem. It says how many iron 2 ions are there in 5 grams of iron 2 sulfate? Mass of iron 2 sulfate. So you're going to have to remember the formula unit of iron 2 sulfate. If you're not able to do that, then you probably can't do this problem. Okay, so iron 2 sulfate is going to be FeSO4. So it wanted to know, well, how many iron 2 ions are there, right? So you can think about it like this. So for every FeSO4, you make 1 Fe2 plus and 1 SO4 2 minus. So it's just looking for the number of iron 2 ions. So we have the mass of iron 2 sulfate here. So we're going to have to figure out the number of moles of iron 2 sulfate. So let's figure that out. So the number of moles of iron 2 sulfate is going to be 5.0 grams. And we're going to have to know the molar mass of iron 2 sulfate. So let's calculate that. The periodic table here. So we've got 55.85 plus 32.07 plus 4 times 16. So the molar mass of iron 2 sulfate is 151.92 grams per mole. Okay, so we've got that many grams of iron 2 sulfate. We'll multiply that by the inverse of the molar mass. Because we want to cancel out the grams and get moles. So 151.92 grams of iron 2 sulfate per one mole of iron 2 sulfate. So that gives us the number of moles there, right? Let's look for, well, the number of atoms. Or sorry, the number of formula units of iron 2 sulfate. So for every one mole of iron 2 sulfate, right? So remember Avogadro's number. One mole equals 6.022 times 10 to the 23rd of anything. In this case formula units. So one mole of iron 2 sulfate is 6.022 times 10 to the 23rd formula units. You have iron 2 sulfate? Like that? Okay, but we don't want the number of formula units of iron 2 sulfate, right? We want the number of iron 2 ions, right? So for every one formula unit of iron 2 sulfate, you've got one iron 2 ion, okay? So we're not looking for that anymore. We're now looking for the number of ions of iron 2 sulfate, okay? Now all we've got to do is multiply these things together and divide them. So 5 divided by 151 times 022 equals times 1 divided by 1. We're going to get two three significant figures. 1.98 times 10 to the 22th F e 2 plus. In order to do your stoichiometry for this, you use your imbalance chemical equation. Any questions on that one? No. Okay.


Now the extension of the transmission grids has taken off. But as you can see, on this graphic, this is a little difficult to see. We have to curtail a lot of the energy that is produced by renewables and that's of course some of the shame and it's also expensive because you then have to use other electricity to provide for the demand. And if you just discard the electricity that you cannot transport from you, you're in your best sense. And it has, as you can see, increased significantly since 2013. Now, but the other thing is the light rule. And this is all containment, but the colors are the different energy source as well. So the blue is all wind and then the gray is solar and biomass. And the different color of the blue is different wind sources offshore and combination of both. Exactly. So this is the one challenge that we have in the grids, the transmission. But we also have a challenge in our distribution grids. You know, the distribution grid is the low voltage grid that was built to provide then the customer, industrial customers and customers with electricity. That is what it was built for. But now we are also using it to collect electricity from these central energy sources like PV, like wind. And it was not built for that purpose. So it's distribution grid and now becomes a collecting grid. And in some places like, for example, here in Eastern Germany, the electricity that is collected by the grid, the amount is much greater than the one that is consumed because there are not so many people living here. And at the same time, there are large areas that are available, for example, for PV trucks or something like that. And the intake can be more than 100 times higher than the supply for the customers. And that is why the distribution grids need to be heavily upgraded. And this is also something that especially our company deals with at the moment as a distribution grid operator to make sure that the system stays reliable and resilient. Now, talking about markets, how is this all orchestrated? You saw that we have a large diversity of electricity sources. We have a complicated grid. We have a supply and demand in different places and so on. And of course, we need smart markets to orchestrate all of this system. We are in a liberalized system. Since 1998, we liberalized the system on two levels. So the one level is generation, electricity generation, is a generator of electricity. You sell your electricity to a wholesale market. And the other liberalized part is retail business. So if you want to buy electricity for your home, you get a contract. But you can choose your provider. Your provider then has to buy the electricity from the wholesale market, bundle it for you, and supply you with electricity to your home. And we have a very fragmented retail market. We have a lot of players who do only retail and only work with the wholesale market and to provide them with electricity. And so you have a large choice and these players are compete with each other. So only the transmission grids and the distribution grids keep being regulated because we call it a natural monopoly. You do obviously, you do not want to bid several grids and then every customer has to decide which grid to use. That wouldn't make sense. So this is there regulated and the regulation also ensures that all customers are supplied with an electric grid, no matter if it is super economic to do it or not. So, but how does the wholesale market work? I don't know if you know this picture. This is schematic, a married order. That means you can see here the cost of the different energy or electricity sources. And these electricity sources are ordered by cost and it is the marginal cost that you see here. So that means how much does it cost to produce an additional unit of electricity? That is then of course correlated to the prices of the fuel. So the most costly fuel would then have the highest marginal costs and of course hydro and wind and solar do not need fuels and then they are from here. And if you want to meet a certain demand, then you can see here, for example, this demand, then we will yield this price, which is based on the marginal cost of the price setting unit, which is in this case a gas-fired coal plant. And if a demand drops and the marginal cost and then it goes to a coal-fired coal plant, in this case, then the market price will drop as well. It is very important to understand that Germany has only one price zone. So that means all over the country the wholesale electricity price is the same. The market, somebody is shaking his head because in California it's completely different. You have the opposite side. In Germany, the market does not take into account the structure of the electricity grid. It is as though the connection between the different places would be perfect, like imagining a huge copper plate or something like that. And after the price is set, then the grid operators have to take into account the structure of the grid afterwards, which we call re-dispatch. So that means if there is some supply in the north and some demand in the south, and it is not possible to match them with a normal market price, then the grid operator has to say, OK, please reduce the electricity production in the north and increase it in the south by this and that power plant. And we will remunerate you for doing. So that is how it's done at the moment. And of course, there are discussions to change it. It worked well in the past, but now the re-dispatch process has increased significantly because the electricity generation is far away from the centers of consumption. Yes, please. What are the main forces preventing Germany from moving to LMP markets? From? LMP, like a more granular market. Why is it taking so long? That's basically a political discussion. So in Germany, and what you want, which is probably difficult to understand, you want to have a kind of a uniformity of the centers of living throughout the country. So although that might be a bit artificial, it is important for us to say, OK, we do not say we do not give an advantage to northern Germany just because there are renewable energy sources. We would like to have it in a socialized way so that everybody sees the center. The re-dispatch process, for example, then is a grid cost that will also be distributed over the customers of the grid zone. And another thing is that the industry is basically in the south. If you introduce different price zones, then the industry in the south would have higher electricity prices. And you don't want that. You want also to protect your industry from higher electricity prices. So if it is a variable location, does it vary by time of day? Yes, yes, yes. It works like this. And the availability of electricity sources varies. For example, if you have a lot of PV, then you would see a shift of the merit order. And of course, if the demand stays the same, you see that the price will drop. OK, so is that the primary mechanism for everybody uses to shift demand over different courses of the day? And say there's a high supply and a low demand. So PV is highest in the middle of the day. So the demand is often lowest. So you shift that by charging more prices. Well, yes and no. And more noes like yes. Because this is not the price that the end customer see. That's the whole same price. And only, let's say, huge operators, industrial operators would take this into account. Or for example, factories that run their own power plants are steel manufacturers or people like that. They can react to a high crisis. But not, let's say, the customers that use electricity just like that. Because we do not yet have this connection between the retail prices and the wholesale market prices. There is no direct mechanism. But for industrial customers, yes. They can change their production. And here you can, for example, see, if you imagine this to be a huge industrial complex, they could say, OK, how do I match my demand and the products that are available on the wholesale market. And the products are actually mostly they are traded as futures and forwards and on different timescales. So you have different kinds of products. You can have long term contracts to ensure, let's say, a minimum of supply. Then you have both base load and peak load products. You have individual hours set as contracts. And now you have also 15 minute contracts. And these are traded in advance. So the closer you get, the shorter timescales get. And before the crisis, you could trade, let's say, year contracts for the third year in advance. So you could now have a contract for three years to be provided with electricity on a certain level throughout the year 2025, for example. Now, markets have become more difficult, more focused on the short term, because the risk for long term trade is too high. And also, it's so high that actually some companies, even large companies, cannot afford the risk deposit anymore. So you will get a margin call if you try to do that. And they just don't have the money to trade on that time in advance anymore. Closer you get, the smaller the products get. And then you also have intraday trading, where it really is a contract by contract. And but this clear mechanism, as beautiful as it is here, is mostly a day mechanism of this clear and significant. So just one word about carbon pricing, because it also affects the electricity price. So we have a carbon pricing mechanism in Europe when you have a facility like a coal-fired power plant, you have to purchase certificates for every ton of CO2 that you emit. And you can also sell these certificates again. So that means if you can buy them and sell them, that there's a price for them. You could also trade them. And there's price development. And there's a cap of certificates. So there's a certain amount of certificates that will be issued and not more. That means in the electricity sector, you can automatically steer the CO2 level that is, or the amount of CO2 that is emitted in Europe, simply because the number of certificates is limited. And this cap of CO2 certificates also ensures then a certain kind of scarcity and then a certain price. So that didn't work for some time where the prices were very low. There were too many certificates in the market. And it went to like five euros per ton, which is not so much if you have a feeling for that, and has now run up to 90 euros per ton. And now I think it's about 60. But how does this affect the merit of it? If you, for example, take a look at lignite, lignite is much more CO2 intensive than for example, natural gas. So per kilowatt hour that you produce with lignite, you would produce much more CO2 than you would produce with natural gas. That also means that you need more CO2 certificates for your lignite fire power plant. And that would increase the marginal cost of the plant. So and in the end, if the CO2 price is sufficient, then there will be a few switch. So that the merit order changes and you have a switch between, between for example, gas and half coal. So that the marginal cost overall, marginal cost for half coal might be even higher than for gas. And then if a certain demand is met, then hopefully a little less coal is consumed than a gas. So that's the basic mechanism, how the CO2 pricing will affect also the production of electricity and then reduce the overall CO2 emissions. Now there is something that we need to balance supply and demand. The pricing mechanism that I just showed you as a little course. So it cannot make up for let's say the changes in demand and electricity supply on a level of seconds, you know? If I go to a switch and switch off the light, then immediately basically as some power plant needs to produce more electricity and that cannot be done by a whole same market. And that's why we have something that we call balancing power. I don't know if the same term is used here. It sometimes has or it's sometimes called reserve power or something like that, but you need it everywhere. And I don't want to go into details, reserve or in balancing power markets are also a very difficult thing to comprehend and will take a lot of time to explain everything. But you can imagine that if it is made to balance out these short-term differences between supply and demand, you would expect the demand for balancing power to increase if you introduce more renewable energy sources because they are volatile and they will unbalance the system to some degree, yeah, on a short, temporary notice. But as you can see here in the demand for balancing power, it has actually decreased in recent years in Germany. And how was that achieved? There were three things that come into play there. The first was a zonal integration where we worked between the different balancing zones also with together with our neighboring countries. The second was improved weather forecasts. So if you know exactly how much your renewable electricity will produce tomorrow or in the next hour or so, then also you can factor that into the whole same market and then you will need less balancing power. And the third one is increased activity on the intraday market. So the traders were very focused on short-term trading and got better and better in exchanging electricity on short notice. And this also helped balancing out the system, but this of course cannot go on forever. This is already very optimized, but at that time we seem to be winning the rates at least for balancing power. Now, switching to the retail market, switching to the retail market. So that's the side of the customer. That's a different thing because as an electricity customer you obviously do not want to buy, let's say hourly contracts or 15-minute contracts or so. You just want to go to the switch on the wall and switch it on and you have a package so that you do not have to care for the procurement of the electricity. And that's why the customer electricity prices look completely different. Here you can see that in recent years the electricity price for the end customer in Germany was about 30 cents per kilowatt hour, which is pretty much in the international, if you compare it to international price. And here you have all kinds of components in there with nice words like paragraph 19, strong, net, and gate, for one who learns German among you that is a very interesting word. And I don't want to explain in detail what it is. It has something to do with protecting energy and intensive industry. But the point is that you mostly have, for example, subsidies for renewables and the green bars, then you have, you have grid Levi that takes into account the costs of the grids per kilowatt hour. And then the bar, the lowest bar, the dark blue one, that is the one that is governed by the wholesale market. So you see in recent years, the part that was actually done in a competitive way, so that actually was governed by markets, that was pretty small here. And the rest of it was just more or less regulated. You also see taxes here. So we have a value added tax also on electricity. And that means also that you pay a tax for the Levi's. You even pay a tax for another tax, the electricity tax. That is a bit absurd. And I'm also something politicians are working on right now to reduce that tax load because the electricity crisis are so high at the moment. And they also abolished the green bar and the subsidies for renewable energy, which is now, which now comes from taxes from the state. So, but this has heavily increased since the crisis. If you now want to have a new contract in Germany for electricity, it costs around 70 cents, 70 cents. So there's more than doubled because this bar has increased so significantly and that it shifted all of the prices upwards. That leads me over to the current crisis. This is the price development in Germany. And as you can see, prices have really spiked recently. And if you take a look at electricity, it was always around 50 euros per megawatt hour in the last years and has now come up to something like 400 in some occasions, even 2,000 euros per megawatt. So it's roughly increased by a factor of 10. And the main reason is the high gas prices with lacking supply from Russia. We see a scarcity on the gas market, which has caused the prices also to spike also about by a factor of 10, but also be very spiky and volatile. And that also then in turn affects the electricity price. But that was not the only problem that we had on the electricity markets. We had outages of nuclear power in France, which then also affects the German electricity market. We had problems with coal supply. We have had problems with hot river water that you cannot then use for cooling and so on and so on. And all came up together and created this scarcity on the electricity market. Now, the problem is that this crisis hits us at a very bad time. As I said before, we had problems where we had problems in the past with investments and to renew but into good expansion and so on. That means that we now have to increase our investment significantly. We have to speed it up. So our government says roughly by a factor of three in everything, we have to build it three times faster than before. And that's, I guess that's roughly right. So it works with the studies that I know that you have to increase the speed with which you expand renewables for example, by a factor of three. And you see here in that graphic the huge offtake that we need in the investments into renewables to achieve our CO2 reduction targets and which for example is 65% of greenhouse gas reductions until 2030 and a greenhouse gas neutrality until 2045. So this of course doesn't just happen like that. It needs to be then supported with instruments from the regulator and our government came up with a long paper, 600 pages about measures how to speed up the carbonization. And an important thing among these measures is to facilitate the feasibility of renewable projects. As I said before, the problem is not that the money is not there or that there are not enough auctions by the state. It's mostly that we cannot implement the projects. And to speed this up and the regulator will change let's say the environment in which we can build these projects, giving them more priority over the interests. And also the volumes that will come up and tenders will obviously also be increased. There will be land assigned to these projects so that they can actually be implemented. Yes, but where does this all go? So until 2030, it's pretty clear what we have to do although it will be very difficult to achieve. This is an overview about all the things that we have to do until 2030 and then 2045. And for 2030, it's mostly about introducing electric vehicles, introducing heat pumps to buildings to electrify heat supply and to expand renewable generation very fast. At the same time, we have to keep up with the grid. So at EON, we will probably have in the end twice as much distribution grids as before. I mean, not an area but in investments. And so also this needs to be ramped up very fast. It all needs to be synchronized where the different parts of the energy system will not work together anymore. And that is mostly the challenge with that. And also you need until 2030 additional backup capacity. And this particular study said about 40 gigawatts of gas-fired power plants, which is just a huge amount. It's a huge amount. So this amount of gas-fired power plants or fossil generation has never been built before in that time. And as you can imagine, few people are now willing to invest into a gas-fired power plants with the gas market being so tense at the moment. So that is a huge challenge. And then the question remains what we do afterwards to achieve carbon neutrality. That is difficult to say. So for 2030, I mean, it's more or less clear what we have to do. It's just the question, how we do it. But after that, it's also the question of what we do. How do you achieve carbon neutrality if you have already, I agree, of renewables in your system? At some point, building more and more renewables becomes much more expensive because you have to carry the integration costs of renewables. You have to build a flexible demand. You have to build new storage. You have to extensively build new grids and so on. So if you exceed about 80% of renewables, then it becomes very difficult in the energy system. And the question is whether to go, for example, more to an import of renewable energy carriers or the domestic production, where you go into biomass or where you go more into hydrogen, where you be very energy efficient or where you, again, use more imports. It's not 100% clear what direction we will be going into. And that's why I believe it is very important to start now exploring the technologies that we will need to go to 100% renewable or at least carbon neutrality. These can be all kinds of options. Could also be negative emissions that we introduce into the system. But that leaves a lot of room for research and it is not so clear how this will be exactly done in the future. So thank you very much. That was it. I hope it was more clear. It's not so easy to describe the whole energy system in like 50 minutes. And if you are confused to some point, then that's just normal. But please, if you have any questions, then go ahead. I wrote down a few questions. One was, you mentioned that they only have one price for the whole grid. Like, do people take advantage of that? Like, is there a way to like, do some kind of like funny market behavior or something? Not at the moment. So what you, because it is basically not rewarded if you do something like that. If you, for example, restrict or reduce your energy production, then basically you have to pay it yourself because most of the electricity is marketed in advance. And if you just reduce that, then you have to buy the electricity from the market and sell it again and then you lose yourself. So that is not possible at the moment or let's say it would be difficult at the moment. But once you introduce mechanisms that would reward a behavior that is beneficial for the grid, then that would be a danger that needs to be regulated. For example, somebody could reduce or let's say could produce shortage in the grid and then at the same time offer the solution for that with flexibility. And that is something that we call in-deck gaming which needs to be avoided if we introduce new market mechanisms that would then be beneficial for the grid. I was also wondering, like this, don't we import a lot of electricity from other countries because prices are so high, right? So like, do you think they could? The electricity prices in Europe are interlinked. Right, how are they? It depends very much on the country. It works like this, you have interconnectors between the different countries and as long as these interconnectors are not fully loaded, the prices remain the same. But if you have a higher demand in one country and the interconnectors are basically full, then the price in this country will increase and it will remain on the same level on the other country because the interconnectors cannot provide more exchange. And that is why we see, let's say in Northern Europe we do not have high electricity price because they mainly rely on hydropower but the high electricity prices are then in the middle of Europe and France and Germany and so on. Cool, cool. And I guess my last question is, if we put more like removals on the grid in Germany or you mentioned that like, if they like tell them to turn off because there's too much in one area, they get paid like a tax, a levy or something like afterwards because they didn't use it. Yeah, sometimes if you, for example, there's too much renewable electricity available and the grid can't transport it away, you would say, there you have to shut down that plant and I will give you money as though you had produced the electricity. So if people like keep building solar and stuff in the same location, won't it like increase the price? Again, please. So I have a misunderstanding, but like if it's like made like a copper plate network and so everyone makes solar in like the same areas where it's sunny or like make wind in the same areas and sunny and then they tell you, please don't produce because it's like too much oversupply in one area. Then like every consumer has to pay this tax to the government so that they can redistribute it. So won't that increase prices if we add more renewables? Ah, and no, if we're not just, it will only not just reduce the prices as much as they could. So you add additional capacity, but you can't use it. So that doesn't increase the prices directly. It might increase the tax. Yeah, it would increase the tax, but yeah, you're right. If you would just continue doing it like that, straightforward, that's true. Sorry, yeah, you're right. It would increase the tax because you would pay for electricity. That is not used and distributed throughout overall customers and that is what we had in the past, but now there's some restriction to that. And so it is a little less rewarded if you do not produce electricity. So the government saw, okay, that is going to be much too expensive if we do it like in the past. And so they restricted this remuneration that you get if you do not produce. Yeah, yeah, you're right. But that was an expensive thing, you're right. Any other questions? Yes. This is a fairly specific question, but I'm kind of curious what the strategy is for increasing like a solar generation. So I assume there's like large plots of land with utility-sized solar arrays. Is that kind of the idea, typically? Like if this isn't solar built on houses, the commercial building that's like large fields. Solar. Yeah, we have both. And so what is your question? So specifically with my question is that just looking at the last 10 years, the efficiency of solar modules has, increasingly approached the theoretical limit of like 26-ish percent. I'm curious that if, what is, or cost competitive is it making a completely new solar farm or is it to retrofit the older solar farms with newer, more efficient modules? This is a very specific question. Okay. For solar, I believe it would be more beneficial to, in most cases, it would be beneficial to let the solar facility run until it degrades. So it will eventually degrade and lose efficiency and some of the modules won't work anymore. And then there's a point where you can say, okay, for also for rooftop PV, where you could say, okay, your main PV doesn't run as good as in the beginning. So you have to retrofit it to a new one. But what you say is very attractive in the case of repowering wind, wind on shore. Wind on shore. Maybe I have the image there. And because the first wind power plants were very small and not so efficient. And then here, you see that? That's no one. Oh, new one. Oh, okay. Yeah. So that is the picture from the Netherlands actually and from my former company, Indutribelle, I believe. And that's very close to the coast. And these obviously the site is very attractive. And you don't want to waste it with these small wind power plants. If you can build such huge turbines that are much more efficient, they are much more efficient because they are to greater height, of course, also. And on the greater height, there is higher wind speed. And you have a huge diameter, which is able then to collect all of the energy that goes through it. And so that is why this is much, much more important for wind than for solar. Earlier in your slides, you showed like how, thank you for, also thank you for the talk, it's been interesting. You showed how like from 2008, like use of renewables really increased in Germany. And that's, it's like an interesting just position to the US because there was kind of like a bubble where people were really investing in renewables and really interested. And then when the recession hit in 2008, a lot of that died. And so, and you kind of mentioned how Jeremy has some special regulatory things that kind of foster, you know, the start of renewable energies and like add a, how do you say, incentive or help companies or utilities transition renewables. Do you know anything about why it was more successful in Germany than the US? Or is that like a political thing? Or what made Germany so successful as it was? In those days, it was just this feed-in tariff that made, and that made it possible to build so much renewable capacity and the fact between 2009 and 2012. But the thing is it was really expensive, like crazy expensive. We spent like 20 billion each year on these capacities and this PV doesn't produce so much electricity. So the uptake of capacities was great, but the share of electricity production was very low. And so that was very expensive, was just beneficial to foster this technology and now make it available for the entire work by basically on that price level. So only very few countries can afford such a subsidy scheme and also only for a limited period of time. So it was not planned to do it like that. That is why it's not so easy to say, oh, why don't you just do the same thing with immobility and do it in the US, which is a much greater market and then it would be super expensive. But in the end, we have all the tools, we have a lot of experience now with subsidy schemes. Then they have changed a little bit. Mostly they are made to take away the risk from the investor. So an investment into renewables is very risky and you do not know about the markets, you do not know if the investment will pay off or if you can realize the project and so on and these subsidy schemes take to a certain degree away from the investor and also ensure that if electricity price drop again, which they eventually will do that the investment is profitable at all. It would take a little more time to explain how these mechanisms work, but all countries use them, all countries. So it's not just Germany. The tool set is available basically, you just have to pick the right choice for your country. Thank you. I think you're... I think if he will still stay a little bit longer, but other students may have another class to catch. Thank you very much. Well, thank you very much. Thank you.


Thank you all for sticking with us as we move through this intense program today. That was a great discussion of the policy options that Brazil may be able to consider and hopefully also that many of its partners will consider as well because this is something that – there's a lot that can be done here but there's a lot that countries must work on together, so we look forward to seeing more progress on that in the future. The next stage in our program is our keynote speaker, Sir Rogeria Studart, who currently serves as the alternate executive director to the World Bank Group, representing Brazil, Colombia, the Dominican Republic, Ecuador, Haiti, Panama, the Philippines, Suriname, Trinidad, and Tobago, so quite a portfolio that he has. He is a member of the Committee on Development Effectiveness and chairman of the G24 and represents Brazil at the IDA 16 replenishment meetings. Prior to his current appointment, Mr. Studart served as the executive director of the same country constituency as executive director. He was a member of the budget and personal committees and chairman of the ad hoc committee on rules for the 2008 regular election of bank and MIGA executive directors. He also served as vice chairman of the G24 from March 2008 to October 2009. Prior to his appointment as executive director, he served as the executive director for Brazil and Suriname at the Inter-American Development Bank and the Inter-American Investment Corporation. From 2003 to 2004, he worked as financial market specialist at the Inter-American Development Bank. He has previously also held positions with UN ECLAC, UN CTAD, and the Brazilian Institute of Statistics and Geography, as well as Chase Manhattan Bank in Brazil. He is an economist by training and holds a PhD from the University of London. He has published many articles and books on macroeconomics, finance, and development finance. He also holds a professorship with the Institute of Economics at the Federal University here in Rio de Janeiro. So I will invite Rogério to take my place up here at the podium, and he will deliver his remarks to you all. Please welcome him. Thank you. I was almost getting afraid that you will not mention the fact that I'm an associate professor at the Federal University of Rio, which is the part that I'm most proud of in my CV. So let me stop by saying that I, even though my title is executive director, I represent Brazil and eight other countries at the board of executive directors of the World Bank. And having said that, what I'm going to say here is just my personal opinions. I want to thank Reina and your team, GFI, for hosting this excellent conference and for allowing me to learn a lot about the subject. I want to thank you all for being here. When Raymond invited me to talk here, I told him that even though I'm a macroeconomist and I've done some work on financial flows, I do not understand anything about listed financial flows. Having thought about that, it says something good about me. But he agreed that I came and he asked me to come. So I just want to tell you a little bit about what I've learned from reading the report, from reading all the reports and from listening to you, what are my main conclusions here. First of all, of course, I was very, at the same time, I was very concerned with the numbers I saw about listed financial flows from Brazil. We talked about 30 something in the past three years, billion dollars a year. That's a lot, it's a huge amount of money. We should be concerned about that for at least two reasons. The issue of tax evasion, which is really important for us. But also because of the reserves that we are losing, and we need those reserves very much for reasons that I'm going to be discussing now. On the other hand, how long do I have? I have 30 minutes. I can talk about my whole life in 30 minutes, but let's start it. The other thing is that we have a little fruit here in Brazil called jabuticaba. Whenever you want to say that nothing, you only find it in Brazil. It's perhaps one of the only unique things that Brazil has. Whenever you want to say that it's not unique, in Brazil we say it's not a jabuticaba. So my first conclusion is that the case of illicit financial flows in Brazil is not, even though we have to be concerned about it, it's not a jabuticaba. The second thing is that it is, if it's a global systemic phenomena, we have to understand it from both the economic and the political point of view to see how to address that. The third thing that I learned is that there's no way for you to combat this issue from a national level. It has to be a multilateral effort. I prepare very quickly a presentation here. I hope that you don't mind that. Just to give you some evidence, I should have produced more of that, but I think that some of the slides here will be able. First, do I have control here? OK, first, as I said, I don't think that the case of Brazil is a jabuticaba is not unique, but we should be very concerned with that. The numbers that you showed to us are quite astonishing, quite astonishing. When you look particularly in the last five years, and even more in the past three years of your database, you're talking about 30 something billion dollars. But then if you look at your other reports on the word volume, you see that from 2002 to 2011, there has been a significant increase of illicit financial flows from developing countries. It should not be a relief to anyone, to individual countries, but at least I do not go out thinking, oh, corruption or lack of governance has become a major endemic problem in my country.  Now, of course, you already mentioned and you already have mentioned the fact that this is very much related. This is Fred. I recommend this website for everyone. It's the Federal Reserve database, it's quite exciting to use that. And this exports value of goods for Brazil monthly. It's an average monthly rate for each year. So you can see Brazil has gone from a monthly exports of around $4 billion to about $20 billion a month in a very short period of time. This has been an incredible, an incredible pace of growth. If you think that, let's go back, if you think about the $30 billion, we're talking one and a half month, less than one and a half month of total exports. Should we be concerned? Yes, definitely. Any money being evaded from our tax base or from our reserves should be something that we should be looking very carefully. But if we think that this is a proportion, then it makes a little bit more sense. And if you look at Oxfam, the Oxfam report that you have in your, I don't think this is from Oxfam. It's from your own report about what you call Brazil's underground economy. Is that informal economy or underground economy? Okay, no, because it makes a difference. Well, first is if we had in the 1970s, 55% of the economy, as underground economy, we would be a country of Matthew also. So maybe you should change that for informal. But anyways, that shows a little bit that what has been also good in the case of Brazil, that size of what you call underground economy has been reduced significantly. As a matter of fact, after the re-democratization of Brazil, the level of transparency, both of government accounts, but also in many other levels, has been increased significantly. If you want to know, for instance, nowadays, how much a government official is spending today on her or his credit card, you can find it on the website. And you can put together all the fiscal data that you want from the website. It's a public availability, not perfect. It could be much improved, but I have to share something with you. I've been abroad and representing Brazil for ten years. I have seen very little cases that match that kind of transparency. And I'm not boasting. I think Brazil is a long way from being the country of the governance that I desire. But the steps that we have taken from the obscure times of the dictatorship to the times of democracy have been extraordinary. Now, as an economist, I've been trying to understand why there has been an overall increase of illicit financial flows for developing countries. It's not just that corruption has increased that substantially. Corruption, I believe, has been in the very high level everywhere, unfortunately, but something has changed. I have, I want to share with you a theory about that. And it has to do with the recent case of financial globalization that we have had. Which has been too much based on deregulation, first of all. And also, which led to financial, illicit financial flows being much more volatile. That has created instability in many levels, in micro-economies, but also particularly in foreign exchange markets. Developing countries are particularly vulnerable to that. And if you look at the foreign exchange volatility index, you see that there was a significant increase of that throughout these years. Now, if I'm a company and I want to keep part of my reserves, I want to keep, in terms of cash, I would prefer to have it in a currency that is strong enough that would withstand the volatility of the international markets. So this is what happens. I mean, there's a tendency for the companies to say, where do I put my money as reserve of value that is going to guarantee that I'm sheltering myself against this volatility? Now, the flight towards stability has not just been an issue of the private sector. Governments have clearly shown their concerns. We have had several cases of financial instability in developing and developed countries now, unfortunately. And countries like Brazil, for instance, have been increasing its international reserves like never before in order to shelter ourselves against this volatility. So the idea that we are living in a more insecure international financial system is not just for the companies. And Brazil is not the only country that has been doing that. Several other, I'm sorry, when you look at the blue line there, which is China, it's not negative in the 1980s. It's just that I put in the right side axis because the increase was so significant that you wouldn't be able to see the other ones. But it's very clear from the literature that accumulation of reserves has been done on purpose in developing countries. In order to shelter themselves from the security of the international financial system. Now, oh, this is moving with this one. OK, now Brazil is a curious case. We have adopted, since this would take much longer time for me to discuss that, but I think most Brazilians are familiarized with that. Remember that I said that probably companies are trying to shelter themselves from exchange rate volatility by putting more money outside. Brazil is a different case because we have had appreciation of the currency, even though the volatility of our currency has increased quite substantially. But if you think, if you are a Brazilian, particularly if you're an entrepreneur in Brazil, probably any Brazilian has heard that you have in your mind that the real has been appreciated for a long period of time. So I think that what will come to your mind is that at some moment, this has got to change. Therefore, you would prefer to maintain part of your reserves of value abroad in order to shelter you from what is possible going to come at some point with the devaluation of the real. Actually, as it's happening since 2000, and yes, to get better eyes on it. But it's bound to happen, it's bound to happen. So it makes completely sense from the commercial point of view. The third part that I learned here is that, remember that I said that this, I believe that this has to do with the very peculiar type of financial globalization that we have. I'm not against financial globalization. Just think that financial globalization, as we had in the recent past, has been very, very negative because the main pillar has been deregulation rather than having better regulation and better rules of the game. So what the deregulation of the international financial system has done is also to facilitate the illicit financial flows through the creation of a significant number of, not only a creation of short financial sectors, centers, but also allowing much more freedom for companies and financial institutions to move money from one to the other. And there should be to increase its transparency. But we need to do more on that. And I know as a member of G20 that we are doing that the global, we, Brazil is a signatory of the global forum, but I think we need to do more. We have to ask our colleagues from the G20 to use their capacity to influence that more. Now, I cannot see that. When you look, the situation has become extremely, and that's also from the Oxfam report, extremely dangerous. When you see that a significant part of foreign direct investment now is coming from offshore financial centers. When that happens, it clearly shows you that it's difficult, if it is difficult for the G8 countries to have that kind of information for their own international financial offshore, imagine for us to have that kind of information. The same thing applies for that. So I don't need to do that. So my conclusions are from this seminar, which I think very much. I really learned a lot about this. It's that first, the increase in illicit financial flows from Brazil are a problem that we should all be concerned here. But it's not an isolated problem. It's not a jabuticada. Second, as I said, it's a matter of extreme concern for moral reasons. I think I don't have to say to you that in a community, when you're evading from paying your taxes, there's a moral issue related to that. But also, there are economic consequences for that. I don't think like Leonardo said, I think the economic consequence, I disagree with you, I may be wrong, but we can discuss that. It is not so much on the level of investment. That money cannot be used to raise investment. Investment, that's a longer discussion. But it does affect our tax base, which is extremely important for sustainable growth, sustainable long-term growth. And also, diminish our international reserves, which we badly need in order to maintain a cushion against the stability of the international financial system, which, by the way, has only increased after the 2008 crisis. Let me mention to you, let me say something to you before I forget that I want to raise your attention to. Mario Draghi, the president of the European Central Bank, has just declared that the eurozone is going to adopt a quantitative easing that is similar or higher than the one that has already been adopted by the United States and Japan. Now, the quantitative easing and the so-called non-conventional monetary policies in those countries that have hard currency are creating a major danger for the international financial system, but particularly a potential source of instability in the near future. We need those reserves to cushion against that kind of increased potential volatility and the existing potential volatility. So it's a matter of extreme concern, as I said, for moral reasons, but also for economic reasons. For any, I wouldn't say even developing country, for any country that cannot issue a hard currency, which, by the way, can only be done by very few countries. Third, higher forex volatility greater, higher demand for stability. This is a problem. It has been an increase of what Keynes would call liquidity preference, but for liquidity in other currencies, this is dangerous. Global financial deregulation made it easier to fly from volatility. And this is one of the underlying reasons why we have those results. Should we be concerned, as I said that, for tax evasion reasons and for international reserve vision? Finally, and that's what I wanted to stress, as I have done before, curbing illicit financial flows is a matter that should be of concern of all of us, the G20, but also the international community. It cannot be dealt nationally, bilaterally. It can only be dealt multilaterally. Let me just share with you, Raymond, as part of the multilateral systems that I've been for 10 years, I'm concerned. I'm really concerned that the multilateral actions that are needed to address the issues that we're facing now are becoming even more and more difficult and people are recurring more and more their national capacities to address the crisis. Thank you so much. Thank you again for this excellent conference, for my learning a lot, and also for bringing this issue to Brazil, because I think this is one issue that should be brought not only to the government, but for the private sector and for the public opinion. And it's an important issue. Thank you.


So it's amazing to wake up one morning and you go from zero monthly listeners on Spotify to over 70,000 in like a week. Like, who does that? Stop that. Let's- I love the groove of it going into the diverse, but I feel like it just- it needs to breathe a little. Right. Because we're coming out of the hook. That's what we're talking about. Yeah. That's the one. I became a full-time songwriter about five years ago when Artlist hit me up. They were just kind of looking for another like American kind of rapper. It just feels exciting, you know what I'm saying? Yeah. Oh, absolutely. We got this, bro. Stop that. Imagine that. Your song is getting put in all of these videos and there's over 200 million views. I didn't realize that Artlist was already kind of building this huge ecosystem and just kind of platform that people were tapping into. The indie artist now can be at home and literally create music and with the right people involved. Your song can end up on television. I can do this. I love it. That's dope, bro. What's so dope about Artlist is now I can be a full-time musician. I can feed my family. I can do what I love and I never have to leave my house. I can just focus on the music. Like, what's better than that?