Charting a course out of economic gloom and doom

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With the economy in uncharted waters, experts are calling for help to put the financial industry on a new course

Challenges lie ahead for the financial industry, but market turmoil also brings with it an opportunity to improve the way it does business, a panel of financial experts told attendees at the recent ‘Challenges Ahead for the Financial Industry’ conference on 31 May.

‘It’s a big mess right now,’ said moderator Søren Plesner, CEO, BasisPoint. ‘The most important thing is just to get it moving in the right direction again.’

For Plesner, one of eight banking experts from Denmark, Britain and the EU invited to speak during the day-long event organised by the British Chamber of Commerce in Denmark-British Import Union and Nordic Capital Markets forum, cleaning up includes things like better governance amongst banks, a stronger EU and central banks that were able to put out fires.

Measures such as interest rate cuts, he argues, were part of ‘an unwise effort to get out of this by boosting consumer demand. If I had a wish list for the G20, it would be for them to sort out global imbalances out.’

A central point of the panel’s discussions during the conference where what role regulation would play in keeping the world economic ship on course. It agreed that regulation was unavoidable, and that the important question was what shape it would take.

‘We’re already getting more regulation,’ said David Hiscock, senior advisor, International Capital Market Association. ‘The challenge will be to make sure it doesn’t create unintended consequences.’

Plesner warned that one of those unintended consequences could be that banks hold to their money at time when the world needs the opposite.

‘But public sentiment and political reaction is towards more regulation right now. The important thing is to just get the whole thing going again and not to worry about whether banks are paying out bonuses that, however undeserved they may be, only add up to only a small fraction of bailout money they’ve received from governments.’

Even though the current economic climate is painful for many, the panel also said it had a healthy consequence of getting investors to consider the consequences of their actions.

‘You can’t always look to the experts. Sometimes you have to make up your own mind,’ Professor Niels Thygesen, University of Copenhagen, said. ‘There is a lot of responsibility involved with being an investor.’

Article by Kevin McGwin, Copenhagen Post

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