Financing the Global Economy: How Can Traditional and Non-Traditional Sources Be Integrated?
27 Jun - 29 Jun, 2016
Lorenzo Bini Smaghi
- Chairman of the Board, Société Générale, Paris
- Chairman, Australian Securities and Investments Commission, Sydney
- Chairman, OakNorth; former Vice Chairman and Head of UK and EU Government Relations and Public Policy, Barclays, London
José Manuel González-Páramo
- Executive Board Director, BBVA, Madrid
- Head of Financial Markets Policy Department, Federal Ministry of Finance, Berlin
- Partner, Head of Public Policy, Asia Pacific, and Australia and New Zealand Market Leader, Oliver Wyman, London
- CEO, ZOPA Ltd. London
- Chair, EUROFI, Paris, partner at Flint-Global, London; former Secretary General, International Organization of Securities Commissions IOSCO, Madrid
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. Technological change and the low level of public trust further call into question the continued viability of the traditional bank intermediation business models and may favor a profound shift to market-based, non-traditional financing models worldwide. Market-based finance provides 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 that delivers predictable results - i.e., a rule book uniformly enforced. The 6th Salzburg Forum on Global Finance 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 identify preconditions for strong and stable capital markets, necessary policies to support their development, and methods of managing associated risks.