A roundup of financial news and highlights coming out of the World Economic Forum Annual Meeting in Davos, Switzerland.
Chinese President Xi channels his best Abe Lincoln: We now live in a world where the Chinese President Xi Jinping spends the day lecturing the world on inclusiveness and government “of the people, by the people, for the people” while US President-elect Donald Trump spends his time tearing down a civil rights hero and trying to convince people to pay to attend his inauguration. Strange days indeed.
Despite electoral evidence to the contrary…: During a panel on the future of monetary policy, it was pretty fascinating that nearly everyone in the room accepted as a given that the extraordinary monetary policies deployed during the financial crisis “worked.” Good thing Anthony Scaramucci, the founder of Skybridge Capital who will serve as Director of the Office of Public Liaison and Intergovernmental Affairs in the Trump administration, was on hand to remind everyone that while those monetary policies might have worked for the global elites, they didn’t work for the people who voted for Brexit, elected Donald Trump and will soon be voting in places like France and Germany.
Trump to bail out Mexico?: During that same panel on monetary policy, Carlyle Group co-founder and co-CEO David Rubenstein explained the threat a strong dollar poses to countries and corporations that took out loans in US dollars, but are working to repay them in their local currencies. Rubenstein even floated the idea that Mexico would be unable to repay its debts and might need to be bailed out by the Trump administration. “Maybe Mexico will be bailed out and pay for it themselves, just like the wall,” wisecracked Wall Street Journal Editor-in-Chief Gerard Baker.
The Future of FinTech: Technology always has – and always will – disrupt the way financial services firms conduct their business. However, who would have predicted an era where firms’ thirst for fintech development talent would affect the manner in which firms constructed employment contracts with their employees. Deutsche Bank CEO John Cryan explained during the Future of Fintech panel: “We are a multinational cooperation. That is not an institution at which all young people aspire to work these days. … They want a different employment contract than a simple employer-employee relationship. They are much more fluid and sometimes they want some equity, so we work with them as a third-party, but with some degree of exclusivity. We can capture the intellectual properly without necessarily formally employing the individual.”
Anne Richards, chief executive of M&G Investments, shared her insight on the role technology plays in markets and drew a very interesting plumbing analogy about the “pipes” that represent the existing strucutre of the financial system and the “water” that represents the data – rather than the money – that flows through the pipes. And with banks collecting more and more data on customers, Richards believes there is a hole in financial regulation with regard to how data is protected. “I don’t think any regulator has their head around this yet,” Richards explained. “Data regulation and financial regulation are converging more and more, and we have no setup as of yet that really brings those two together.”