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Financing the Global Economy: How Can Traditional and Non-Traditional Sources Be Integrated? 27 Jun - 29 Jun, 2016
JUSTICEFinancing the Global Economy: How Can Traditional and Non-Traditional Sources Be Integrated?27 Jun - 29 Jun, 2016

SESSION

563

    Overview

    Against the background of fragile economic recovery and slowing growth in emerging markets in the aftermath of the financial crisis, the focus of policy-makers and regulators is shifting from fixing the causes of the last crisis to stimulating growth. While the banking sector has been deleveraging after the crisis and grappling with new regulatory requirements worldwide, its ability to fund the real economy and promote growth is becoming constrained. Tightening fiscal constraints have also reduced the ability of the public sector to fund policies favoring growth and jobs. Traditional bank intermediation is still important but technological changes seem to enable a shift to market-based, non-traditional financing models worldwide.

    Market-based finance promises to provide healthy competition for banks and offers new sources for financing economic expansion. The challenges in developing and supporting capital markets differ from region to region. For example, the US needs to attract global savings and investment to the US public markets, especially at a time of increasing capital markets competition. Europe, by contrast, seeks to diversify beyond bank financing by channeling domestic savings toward local growth projects and to increase reliance on equity over debt. Emerging markets seek to create regulatory structures that can channel domestic savings into sound local products and projects, and attract foreign investment without exposing local markets to "sudden stops" in investment which can imperil growth and stability. Alongside these differing regional objectives, the globalization of capital markets calls for a new supervisory and regulatory community at the international level. Markets are attractive to investors in proportion to their transparency, stability and liquidity. These three factors require a regulatory framework for participants and the market itself that deliver reasonable predictable results. Fintech is also changing the face of the financial industry. It has already started transforming banking in mobile payments, peer-to-peer lending and other areas, and is likely to have a profound impact on capital markets as well.

    The 6th Salzburg Forum on Global Finance in a Changing World will explore how banks, non-bank intermediaries and markets all contribute to the sound functioning of the global economy. It will evaluate current approaches to strengthening recovery and examine the shift to market-based financing. It will also examine the increase in electronic trading and use of high speed algorithms. It will identify preconditions for strong and stable capital markets, necessary policies to support their development, and methods of managing associated risks.

    Key Questions

    • How can capital markets enhance finance for growth? What is the right allocation of roles between bank-based and market-based financing? How can we harness strengths and capabilities of both to serve the economy?
    • For what geographies and economic sectors is the potential greatest? What are concrete (policy and other) barriers to tapping the potential of capital markets?
    • What is the future impact of technological advances and disruptions?
    • Do we observe increasing integration for capital markets across the globe?
    • What risks to common policy objectives would result from a greater reliance on capital markets?
    • What are the implications of the shift to market-based finance for supervisors and regulators?
    • Do we need global standards properly and consistently applied to support a global capital market?
    • How can we develop the right infrastructure that supports market-based finance?
    • What measures should be taken to build trust?

    Participant Profile

    The Forum brought together policymakers; regulators and supervisors (in particular securities regulators); financial services firms and alternative financial intermediaries; consultants and academics.

    Co-Chairs

    CO-CHAIR
    Lorenzo Bini Smaghi
    Chairman of the Board, Société Générale, Paris
    CO-CHAIR
    Greg Medcraft
    Chairman, Australian Securities and Investments Commission, Sydney

    Contributors

    CONTRIBUTORS
    Paul Andrews
    Secretary General, International Organization of Securities Commissions, Madrid
    CONTRIBUTORS
    Cyrus Ardalan
    Chairman, OakNorth; former Vice Chairman and Head of UK and EU Government Relations and Public Policy, Barclays, London
    CONTRIBUTORS
    Guido Bichisao
    Director Institutional Strategy Department, European Investment Bank, Luxembourg (invited)
    CONTRIBUTORS
    Francesca Carlesi
    Global Head of Regulatory Affairs, Deutsche Bank, London
    CONTRIBUTORS
    Raj Date
    Managing Partner, Fenway Summer LLC, Washington, DC
    CONTRIBUTORS
    Andreas Dombret
    Member of the Executive Board, Deutsche Bundesbank, Frankfurt am Main
    CONTRIBUTORS
    Douglas Flint
    Group Chairman, HSBC Bank Plc, London
    CONTRIBUTORS
    José Manuel González-Páramo
    Executive Board Director, BBVA, Madrid
    CONTRIBUTORS
    Edward Greene
    Senior Counsel, Cleary Gottlieb Steen & Hamilton, New York
    CONTRIBUTORS
    Levin Holle
    Head of Financial Markets Policy Department, Federal Ministry of Finance, Berlin
    CONTRIBUTORS
    Jacob Hook
    Partner, Head of Public Policy, Asia Pacific, and Australia and New Zealand Market Leader, Oliver Wyman, London
    CONTRIBUTORS
    Jaidev Janardana
    CEO, ZOPA Ltd. London
    CONTRIBUTORS
    Patrick Kenadjian
    Senior Counsel, Davis Polk & Wardwell London LLP, London
    CONTRIBUTORS
    Michael Krimminger
    Partner, Cleary Gottlieb Steen & Hamilton LLP, Washington DC
    CONTRIBUTORS
    Wendy Lucas-Bull
    Chairman of Barclays Africa Group Limited, Absa Bank Limited and Absa Financial Services Limited, South Africa
    CONTRIBUTORS
    Steven Maijoor
    Chairman, European Securities and Markets Authority (ESMA), Paris
    CONTRIBUTORS
    Sandra O'Connor
    Chief Regulatory Affairs Officer, JPMorgan Chase & Co, New York
    CONTRIBUTORS
    Randal Quarles
    Managing Director, The Cynosure Group, Salt Lake City, UT
    CONTRIBUTORS
    David Wright
    Chair, EUROFI, Paris, partner at Flint-Global, London; former Secretary General, IOSCO, Madrid