Global Shocks – Can Financial
Systems save the real economy?


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Panel Discussion - wednesday 10:30-11:30

"Financing in a Highly Risky World – Who Compensates for the Ever Increasing Risks?"

Numerous political crises and affairs such as the civil war in Syria, the rise of the Islamic State, and the political instability in Eastern Europe occupy the news on a daily basis. Right Wing parties are rising in power, fuelled by the economic fear of the middle class and the handling of the refugee crisis in Europe.

Additionally, the European economy’s recovery is slowing down and the United Kingdom’s vote to leave the European Union adds significant uncertainty to an already fragile continent. The Brexit might bring about ground-changing difference, e.g. with respect to trade agreements, as well as the freedom to enter and leave the country. It creates a threat not only to the UK’s economic environment, but to Europe as a whole.

Globalization – in particular better means of communication, transportation, and payments – has, on the one hand, enabled companies to enter new markets, and produce their goods where it is most beneficial to them. On the other hand, the international division of labour is causing enormous problems in developing countries. Working standards drop and the distribution of wealth is becoming more uneven.
These risks strongly affect the financial markets as well and make them more unpredictable than ever.

Panel Discussion - wednesday 14:30-15:30

"Defending Margins in a low Interest Rate Environment"

The aftermath of the Economic Recession, that was triggered by the subprime crisis at the end of 2007, is still acute today. While consumption dropped to unprecedented lows, government spending increased, leading to higher public debt. For most monetary authorities around the globe the cure seemed to be cutting interest rates to effectively zero percent in order to warrant price stability and stimulate economic growth.

Several years later, pre-crisis output levels still haven’t been reached even though interest rates continue to hover at all-time lows. Hence, the European Central Bank has been prescribing additional “medicine” – such as Quantitative Easing or Forward Guidance – to the economy. Eliminating interest rates, however, is accompanied by risky side-effects such as the re-occurrence of bubbles, especially in financial and housing markets.

Persistently low interest rates are expected to put pressure on the profitability of the banking industry to the extent that the banks might no longer be able to cover their cost of capital. One of the effects of these persistently low interest rates is the shutdown of retail banking branches. In Germany alone, 1,300 branches were permanently closed in 2015. Insurers and pension funds are also struggling to generate sufficient returns to meet their obligations to policyholders and investors. The pressure on margins is on.

Panel Discussion - thursday 11:45-12:45

“FinTechs – Turning the World of Finance Upside Down?”

Digitalization is ubiquitous and new business models emerge and disappear at a pace most established industries have not yet gotten used to. To the surprise of many, FinTechs have started to conquer the financial world, driven by technology, innovation, and a forward-looking entrepreneurial mindset.
Companies such as N26, LIQID, or IEX have presented novel solutions for banking services such as the extension of loans, general cash transfer, and the investment of private savings. They can even offer independency from traditional stock exchanges. FinTechs facilitate processes, increase efficiency, save time, and provide a richer user experience.

Their value propositions have seemed auspicious to several established financial institutions wherefore a number of them have already been acquired by commercial banks, who saw the FinTechs’ potential and the simultaneous threat they represented to their ingrained business models. However, just as many FinTechs have continued to develop their products and widen their services portfolio, while some have even started to register for their own banking licenses and will thus also be subject to regulation in future.
We are looking forward to welcoming you in January to make our vision come true
Uniting the World of Finance!