Financial Regulatory Outlook Conference 2020

Greener finance, new financial systems, and responsible data use can reshape the financial sector as it builds back from COVID-19.

Where: Virtual event.

When: November 23, 2020.

Overview: The financial sector is challenged by massive uncertainty brought on by the pandemic, but also faces material opportunities for beneficial change. Policymakers and governments have the chance to help (re-)build key parts of the economy and financial systems to make them fit-for-purpose in a new normal. Green finance and sustainability will become key pillars of the post-pandemic world. And a new age of increased digitization and the responsible use of data has the potential to reshape the mandate of central banks and supervisors. Doing this effectively means investing in revival, not just survival. 

During the event, jointly organized by the Centre of International Governance Innovation and the Oliver Wyman Forum, we will discuss how policymakers and financial services leaders can help the industry navigate the risks it faces during and after the pandemic and, as a result, build more resilient economies for the future.

Agenda:

Panel discussion followed by Q&A:

Elizabeth McCaul, Member of the Supervisory Board, European Central Bank            

Raghuram Rajan, Former Governor of the Reserve Bank of India, University of Chicago             

Lorenzo Bini Smaghi, Chairman, Société Générale

Ted Moynihan, Global Head of Financial Services, Oliver Wyman (moderator)

Keynote Address:

Giovanni Tria, Former Italian Minister for Economy and Finance and Distinguished Fellow, CIGI

Key Takeaways:

·        European banks face a tough challenge after a second wave of the coronavirus blunted the euro area’s recovery in the autumn. The European Central Bank believes nonperforming loans (NPLs) could exceed the peak hit during the 2008-2009 financial crisis. Banks need to identify and provision for NPLs and differentiate viable from weak credits before debt payment moratoria expire.

·        Banks need to bolster their competitiveness and profitability in order to finance economic recovery. Digitizing operations, a trend the crisis has spurred, can help. Completing the EU banking and capital markets union would bolster banks by fostering cross-border activity and securitization. And consolidation can strengthen banks and attract more investment to the sector.

·        The public and private sectors have key roles to play in helping the corporate sector rebuild. Asset management companies could step in and buy debt of ailing but viable companies while governments should consider extending targeted subsidies and encouraging market-based debt restructuring. The key is to prevent today’s economic crisis from spilling over into a banking and financial crisis.

 

"Consolidation is one avenue that we’ve also been very focused on. We think this can ultimately help pave the way to restoring European banks as attractive investment propositions."

Elizabeth McCaul, Member of the Supervisory Board, European Central Bank

"We would like banks to have a lot of capital, but also banks to use the capital to lend. And of course it doesn’t work. You cannot have two objectives."

Lorenzo Bini Smaghi, Chairman, Société Générale

"We have no idea what the sustainable pace of growth in the real economy is. We don’t know what the true level of credit risk is. What does commercial real estate look like when we recover?"

Raghuram Rajan, Former Governor of the Reserve Bank of India, University of Chicago

"Today’s situation seems to have pushed to the limits the global financial and trade architecture. We need a new Bretton Woods initiative, jointly promoted by all main economies, including the emerging ones. Possibly the first step should be a EU-US Transatlantic pact."

Giovanni Tria, former Italian Minister for Economy and Finance and Distinguished Fellow, Centre for International Governance Innovation