The experience of recent years has exposed a range of vulnerabilities across financial systems, and called into question the social value of the finance sector and its activities. Policy-makers and financial institutions have introduced important reforms, but more work remains before the bonds of trust between system and society can be repaired.
In that context, the Role of Financial Services in Society initiative was launched among a group of public and private sector leaders to agree on and demonstrate the social value of the system and its core activities.
The initiative is overseen by a steering committee and supported by a working group and project team.
A Multistakeholder Compact
The Role of Financial Services in Society: A Multistakeholder Compact is a commitment by senior leaders (including chief executives and senior managers of financial institutions), regulators, economists and academics, as well as civil-society representatives, to restore public trust in the financial system.
It lays a foundation for the long-term transformation of the financial industry by offering an explicit articulation of
- The role of the financial system and its institutions in serving the economy and society at large.
- The characteristics of a financial-services model that consistently delivers social value.
- A consensus framework for assessing whether financial institutions and systems are fulfilling agreed purposes and delivering social value.
Using this framework as a guide, the Compact calls upon financial institutions to redesign their business and operating models, and policy-makers to strive towards reforms that enable the financial system to meet the needs of society.
The initiative is currently translating the Compact into specific, actionable ways to prioritize the needs of society. Over the past year, high-level representatives from private and public sectors have discussed a variety of pressing issues, such as how to help the financial system improve the trade-off between innovation and safety. This led to a new publication, The Role of Financial Services in Society: Towards Responsible Financial Innovation. The initiative is also broadening its engagement with policy-makers and regulators to align the financial system more closely with society’s needs. In that context, the Steering Committee is having a number of discussions about how to achieve “optimal” levels of credit and minimize financial risk.