The Finance Foundation
Reinventing capitalism for all
President of the Finance Foundation

And crisis, are cardiac arrests of the financial system
December 02, 2014 , Michel Gabrysiak - Financial Markets


         Big Data and governance of information is invading banks. Many motivations are behind this move.

         Being chased by regulators and the judiciary, banks expect governance of information to help them better than normal, traditional, routine compliance systems. It means that they expect governance of information to be able to spot and show bad behaviour among the employees, especially traders. It should spot and stop rigging interbank lending rates and foreign exchange rates. It will certainly be cheaper to use information governance than pay billions of fines. But it ain’t easy. New technologies have to be invented.


         Suddenly, everybody in the capital markets smiles. Capital flows are back to their level of 2011.

         But global cross border flows are behind their level of 2007. In other words, nothing to be triumphant about. In 2007, 8.5 trillion dollars were exchanged, today it’s 3 trillion at most.


         Deutsche Bank Research published studies on fintech and the digital revolution in the financial sector. They call it, “algorithm based banking with a human touch”. I must say that the human touch at a nanosecond speed seems elusive.

         Apart from that, the Deutsche study explains very clearly that, digitalisation of the banking and financial sectors are crucial to the future of banking. They will change completely. They will probably have much less of a human touch. The personalised service, the human touch will tend to disappear but it will happen. And the study is worth reading.


         The Vice President of the European Central Bank stresses the point that, if ECB increases dramatically its bond buying policy, it will be quite risky for Europe. The debate on what is too much will go on. The key question remains; credit and debt for countries, or for companies creating jobs and wealth? 


         Martin Wolf wrote in the Financial Times that, the high income economies have been suffering from chronic demand deficiency syndrome. This, triggers crisis.

And crisis, he writes, are cardiac arrests of the financial system. They have potentially devastating effects on the economy.

         According to him again, the eurozone has done a bad job, and is still doing a bad job in dealing with this syndrome.

         Europeans definitely need to find shock therapies. They don’t seem to be willing to do that, do they?



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