BWC Future of Finance Conference 2024 – Singapore

On the 13th of September 2024, the Bretton Woods Committee organized the third edition of the Future of Finance Forum, hosted by UBS Singapore.

The most important challenges across the real and financial sides of the world economy were debated by the esteemed speakers, including the Chair of the Bretton Woods Committee, the Chairman of UBS Group, and the Governors of the central banks of India and Singapore.

The discussion largely focused on the future of monetary policy in the US, which is the largest economy in the world, with a nominal GDP of over $28.6 trillion dollars in the second quarter of 2024.

The participants underlined the prospect that the US Federal Reserve may enact normalization monetary policy, by cutting the interest rate by at least 25 basis points. The president of BWC, William Dudley, advocated for reducing the interest rate by at least 50 basis points due to his concerns that the labor market and the economy may suffer otherwise.

The event participants also discussed the increasing US federal debt, which increased by $1 trillion from January to July 2024 and currently stands at $35 trillion, and the US Federal Reserve's intervention during the unprecedented COVID-19 pandemic.

On the other hand, the speakers pointed out that the Great Financial Crisis in 2007 spurred sweeping reforms to the banking system. Due to these reforms, the amount of bank capital is 10 times higher than in 2007.

In this context, the Chair of the Bretton Woods Committee underlined that investment fund regulations should be improved by requiring a higher level of liquidity to cope with outflows and increased risk perceptions in international financial markets.

On the flip side, the participants of the Future of Finance Forum in Singapore stated that the banking sector regulations implemented after the Great Financial Crisis fostered the development of non-banking financial institutions. 50 percent of global financial assets are currently held in non-banking financial institutions, which is an increase from 38 percent in 2007.

For instance, the Chair of UBS emphasized the important role of adequate resolution programs and access to liquidity for financial institutions in crisis periods. In this respect, according to the European Resolution Examination Programme, the top three priorities for 2025 for the resolution authorities and the banks are the operationalization of resolution tools, the liquidity strategies in resolution, and the management information system for valuation. Last but not least, according to the European Central Bank, European banks should better address the risks determined by geopolitical tensions and structural economic crises.

The Governor of the Central Bank of India emphasized the positive developments in terms of potential output, which is currently estimated at around 7%. India's high potential output may lead to increased foreign direct investments, or exposure via government bonds.

However, Mr. Shaktikanta Das also underlined numerous risk factors, including floods, commodities prices, and the intensifying trade restrictions in the world.

The Governor of the Central Bank of Singapore emphasized the unprecedented changes in the financial-banking sector, which have been accelerated by digitization and artificial intelligence.

For instance, the dependence on several models of artificial intelligence may lead to the decline of diversity, which, in turn, may reduce resilience in case of future shocks.

The Hong Kong Stock Exchange representative underlined its focus on strengthening its relationship with the Middle East, which it views as important due to the current geopolitical uncertainties.

All views expressed by members are their own and not reflective of the views of the Bretton Woods Committee.

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