DER SPIEGEL: Ms. Georgieva, do you still shake hands with your guests when you welcome them to an International Monetary Fund meeting?

Georgieva: Yes. But whenever possible, I wash my hands as a precaution. For a large international organization like the IMF, coronavirus poses a double challenge: Our task is to analyze the economic consequences of the epidemic, but at the same time, we must protect our employees.

DER SPIEGEL: The Chinese government has sealed off entire regions the country because of the virus. Traffic has been restricted and many factories have been shut down. To what degree will the virus slow down the world economy?

Georgieva: At this point, we only have scenarios, no forecasts. There is a high degree of uncertainty about the danger posed by the virus , about the speed with which China can recover and about the corresponding consequences for the world.

DER SPIEGEL: What do these scenarios look like?

Georgieva: The best case would be a V-shaped development. In that case, the disease would trigger a sharp economic slump, followed by an equally strong upswing after successful infection control. If this were to happen, the virus would cause only limited damage, just as was the case during the SARS epidemic 17 years ago. At that time, the disease reduced global growth by about 0.1 percentage points.

DER SPIEGEL: How likely is it that things will go just as smoothly this time?

Georgieva: It is still too early to make a reliable forecast. This virus is different, and China accounts for more than twice as much of the global economy as it did then. Moreover, the world economy was in the middle of a boom in 2003. Today, we are faced with many uncertainties that are slowing the pace of economic growth.

DER SPIEGEL: The Chinese government has taken drastic measures to contain the epidemic. Is Beijing's crisis management appropriate?

Georgieva: China has acted strongly and consistently. The government is doing a lot to stop the spread of the virus. Moreover, the People's Bank of China has lowered the policy rate and pumped a good $115 billion of additional liquidity into the economy to support the economic situation. That was the right thing to do.

DER SPIEGEL: Last autumn, the IMF spoke of a "synchronized slowdown.” Will the virus exacerbate the problems?

Georgieva: Since our last forecast, there have been disappointing economic data from places like India, Chile and Hong Kong. But the U.S. and China have also struck a trade deal, which has reduced one of the biggest risk factors for the global economy. And there has been the synchronized response from central banks around the world. Almost 50 of them have cut their interest rates in recent months.

DER SPIEGEL: Was that the right move?

Georgieva: Absolutely. In addition, many governments have increased their expenditures in order to boost growth. That was helpful, too. If we find that the epidemic has more serious consequences than previously assumed, we will take coordinated measures to support the global economy. 

DER SPIEGEL: Many experts believe that the consequences for Germany and Europe could be particularly significant because of the close economic ties with China. Do you agree?

Georgieva: For one thing, we all have to adjust to the fact that our interconnected world has become less secure. First, it was the tension in world trade, then the Iran conflict and the forest fires in Australia, now it's the virus. One could almost say that uncertainty is the new normal. And second, Europe is particularly affected because the Continent is characterized by four weakness trends: low growth, low productivity, low inflation and low interest rates. Europe must escape the trap of these four lows. 

DER SPIEGEL: But how?

Georgieva: The EU has to ask itself why the productivity of its companies is so low, lower than in the U.S. in any case. How can it be that Europe is falling behind in those very areas to which it owes its economic strength: education and research? Why are young people in Bulgaria or France nowadays less able to calculate and read than their peers in Singapore or South Korea?

DER SPIEGEL: The European Commission in Brussels is seeking to increase spending, particularly on climate protection. Commission President Ursula von der Leyen has announced a Green Deal to make the Continent CO2-neutral by 2050. 

Georgieva: I welcome the fact that Europe wants to play such a strong role in the fight against climate change. This could once again make the Continent a global leader, technologically and economically. The Green Deal could be the key measure to boost productivity and growth.

DER SPIEGEL: But the Green Deal is risky if the rest of the world chooses not to join in.

Georgieva: I don't see that. I have spoken to many political leaders in Africa and Asia in recent months. I got the impression that they all want the transformation to a low carbon economy. If the rich countries help them, the poorer nations will also switch to renewable energies. Kenya, for example, wanted to build a new coal-fired power plant until the country received the necessary support from the World Bank and others to develop an alternative from geothermal and solar power. This could serve as a role model in the future.

DER SPIEGEL: What is Germany's role here?

Georgieva: Germany has the great privilege of having considerable financial resources, unlike many countries. There is no shortage of money to promote a green transformation of the economy. Moreover, the governments in Berlin, Paris and Brussels have to ask themselves how they can mobilize private capital more effectively. In this respect, the EU lags behind the U.S. What is needed is to advance the European capital markets union and more cross-border mergers in the banking sector. 

DER SPIEGEL: The world is being shaped by the new economic rivalry between the U.S. and China. How should Europe position itself among the superpowers?

Georgieva: Europe should speed up the completion of its union in this fast-changing world. Only from a position of technological strength can Europe be able to compete. For example, I am concerned that Europe is practically non-existent in the world of digital platform companies. These are issues on which the governments in Paris, Rome, Berlin and Brussels must act more decisively. A more confident and less fragmented Europe is needed.

DER SPIEGEL: The U.S. is showing little consideration for the EU’s challenges. They want to prevent China from becoming a global economic leader and are pushing the idea of completely decoupling itself from China. What does that mean for Europe?

Georgieva: There is a technological race to win dominance in certain industries. Europe must try to keep up. On the other hand, the world economy is so interwoven that it is hard to imagine economic separation. Would decoupling make us all more prosperous? Certainly not. 

DER SPIEGEL: Globalization is increasing financial interdependence in the world. Is growing debt a problem?

Georgieva: You know the story of the frog and the cooking pot. At first, the frog likes it when the water temperature is raised. But eventually the heat becomes life-threatening. It's the same with global credit. At present, states, households and businesses are in debt to the tune of about $188 trillion. That is more than before the global financial crisis. It is obvious that this scale of global debt must worry us. 

DER SPIEGEL: During the crisis, all governments wanted to control the debt levels. But things turned out differently. Why?

Georgieva: First, interest rates are very low, making it attractive to borrow money. At the same time, the pursuit for higher returns increases the danger of bankruptcies because lenders have to finance increasingly risky projects in order to obtain the desired return. What can be done? Transparency, in addition to carefully targeted aid in low income countries to allow governments to lower their debt burden. 

DER SPIEGEL: Recently, debt in the corporate sector has risen more sharply than elsewhere. Are the risks still manageable?

Georgieva: What reassures us is the fact that banks have become more resilient since the crisis, with higher capital and liquidity thanks to post-crisis regulatory reforms. Nevertheless, risks have not disappeared. Activity has often migrated from the center of the financial system to the periphery, to so-called non-bank financial intermediaries, and corporate debt is a good example, especially in the U.S. In discussions with international financial supervisors, we have come to the conclusion that there is a need to monitor these risks and expand the regulatory perimeter as appropriate. We expect this to be on the agenda of our spring meetings in Washington.