Financial leaders have devised a new way of winning back public trust.
The World Economic Forum has just launched a new Multistakeholder Compact as a means of ensuring that financial leaders will try and give back more to the public.
The Role of Financial Services in Society: A Multistakeholder Compact was created to be a guide for senior executives of financial institutions on how to promote economic growth in a sustainable way and help the global financial system become more resilient.
Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, said:
“The world of finance is an important element in our economic system. After all the turmoil we have experienced over the past years, and which has undermined substantially the trust we have in the financial community, it is important that leaders come together to re-establish the values and the principles that are so necessary for restoring economic growth.”
The Compact stresses the needs of society that can be given by the financial system, revealing all the steps necessary to properly meet these needs, as well as providing indicators on whether the needs are being met.
Endorsers of the Compact pledge to make new policies try and meet these needs.
Anshu Jain, Co-Chairman of the Management Board and the Group Executive Committee of Deutsche Bank, said:
“This is an important opportunity for the industry to take stock of what went wrong and transform our practices. As we think about addressing the fractures in the financial system, we must consider not just the inefficiencies and shortcomings as highlighted in the last crisis, but to also consider emerging and unknown risks.”
The Compact states what the Financial System should provide to Society:
- Promote financial and economic resilience
- Safeguard savings and the integrity of financial contracts
- Facilitate efficient allocation of capital to support economic growth
- Provide broad access to financial services products and services
- Enable smoothing of cash flows and consumption over time
- Enable payments
- Provide financial protection, risk transfer and diversification
- Collect, analyze, and better distribute information for optimum economic decision making
- Provide effective markets
Michael Poulos, Partner and Head of Oliver Wyman’s Financial Services Practice Group for the Americas, said:
“The Compact is an initial step. It is valuable because it has created a shared set of goals for stakeholders with diverse backgrounds and views. It will be impactful as industry practices are transformed to better align with society’s needs over the coming months and years.”
Alan Blinder, Gordon S. Rentschler Memorial Professor of Economics and Public Affairs at Princeton University, concluded:
“This group understands that mistakes were made. Our goals are ambitious, but we have a pragmatic vision of how to build a financial system that prioritizes society’s best interests.”