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New Financial Architecture
The Future of the Global Financial System - Navigating the Challenges Ahead
Released 26 January 2010
 The Future of the Global Financial System – Navigating the Challenges Ahead, developed in collaboration with Oliver Wyman, explores the forces that shape the financial services landscape in the near term and provides stakeholders with tools to approach two of the most pressing challenges of the post-crisis world: managing and resolving governments’ newly acquired equity interests in financial institutions and restoring trust in financial institutions.
Press release I Download the Report (PDF)
The report sketches three themes which are shaping the financial services industry in the near to medium term:
1. Rethinking business models in a lower profit world – A multitude of factors point to lower run-rate industry profitability in the near and medium term. Financial institutions will need to rethink their business and human capital models in order to adjust and differentiate as a result.
2. Increasing client focus – In light of lower industry profitability and more demanding customers and regulators, substantive value creation for customers and society will be a key driver of success. They will need to promote and enforce positive values such as integrity and responsibility.
3. Polarization of the competitive landscape – Strategic choices in terms of regional footprint, product offering and risk appetite will increasingly polarize as financial institutions seek to justify their strategies to investors and regulators who apply a much greater level of scrutiny.
On the challenge of restoring trust in financial institutions, the report stressed that trust is a critically important issue not only for the general health of the financial system but also as a source of competitive advantage.
Governments as shareholders: navigating the challenges of newly held interests in financial institutions
Released 2 December 2009
 This special report was devoted to the issue of managing and resolving governments’ newly acquired equity interests in financial institutions. Taxpayers will benefit most if governments put shareholder responsibility ahead of political considerations when it comes to managing their equity stakes in financial institutions. With over US$ 700 billion of taxpayers' money invested, the wrong choices – in policy objectives, management strategy, or emphasis in execution – could cost taxpayers billions of dollars and have long-term implications for the stability of the global financial architecture.
The challenges facing governments managing and resolving these newly acquired equity interests in financial institutions are explored in a new working paper from the World Economic Forum in collaboration with over 150 leaders in public policy, academia, and business collaborated as part of a year-long study.
Their discussions raised six key suggestions for governments:
1. Address equity stakes separately from other types of crisis intervention
2. Aim for a rapid exit whilst protecting investment value
3. Establish an independent process to manage ownership stakes
4. Restrict government influence on owned institutions to board-level issues
5. Be realistic about securing and incentivizing the best available talent
6. Raise transparency beyond public disclosure of financial performance
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As the global economy recovers, governments find themselves transitioning from a focus on crisis containment to a focus on managing its interventions towards eventual resolution. With over US$ 700 billion of new equity investments in financial institutions, governments and the taxpayers they represent, have a strong vested interest in ensuring that these investments are properly managed.
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Max von Bismarck, Director and Head of Investors, World Economic Forum
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