Michael C. Bodson, DTCC President and Chief Executive Officer
Michael C. Bodson, President and Chief Executive Officer, The Depository Trust & Clearing Corporation (DTCC), and Larry Thompson, Vice Chairman and General Counsel, DTCC, led discussion panels at the 2015 World Economic Forum (WEF) Annual Meeting in Davos-Klosters, Switzerland, January 21-24.
The World Economic Forum (WEF) is an independent, not-for-profit international organization committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas.
Bodson’s session, “The Rise of Shadow Banking,” focused on how growth of non-traditional financial vehicles affects financial system stability. Panelists discussed:
- Liquidity and new credit practices;
- Harmonization and system stability; and
- Implications for the real economy on the critical role capital markets play in economic development through the efficient allocation of domestic and international savings into productive investments.
“As shadow banking continues to grow, the industry must identify the potential systemic risks it poses to the global financial marketplace,” Bodson said. “There needs to an in-depth understanding about the benefits of shadow banking along with the overall impact it has to the financial system.”
Shadow banks are financial intermediaries that provide services similar to traditional commercial banks. However, shadow banks do not accept traditional bank deposits. The Financial Stability Board’s recent report Global Shadow Banking Monitoring Report 2014, estimates assets for non-bank lending institutions to be $75 trillion after growing more than 7 percent in 2013.
Bodson also took part in the Financial Services Governors sessions, which are a series of meetings with the CEOs of 50 major financial institutions globally. Discussions covered topics such as the state of the industry, the impact of technology and changing geopolitical uncertainty on the industry, the role of financial services in society, macro-prudential regulation of financial markets, the need to evolve business models and opportunities for the industry to improve its reputation and impact on society. Among the guests who attended the meetings were U.S. Secretary of the Treasury Jack Lew, Governor of the Bank of England and Chairman of the FSB Mark Carney, Member of the Board of the ECB Benoit Coeure and New York Times columnist Thomas Friedman.
Larry Thompson, DTCC Vice Chairman and General Counsel
G20 Financial Reforms
Thompson led discussions on guiding market participants and financial policymakers in a session entitled “Path to Regulatory Reform,” which examined various aspects of global efforts to implement the G20 financial reforms. Thompson helped session participants navigate an in-depth discussion of the impact of new regulations on technology and innovation in the financial services sector.
“Building a coordinated and harmonized regulatory environment represents one of the greatest challenges to the future of our industry, and it is critical that policymakers and market participants work together to promote ongoing innovation in the financial markets,” Thompson said. “The session offered a valuable opportunity for financial stakeholders to discuss ways to improve coordination globally on these issues. This is very much in keeping with the spirit of the WEF, which has always encouraged public-private partnership.”