Post date: Jan 23, 2013 8:44:39 PM
The structure of the world financial system and reform in Russia, Europe and Africa were the main themes on the second day of the World Economic Forum Annual Meeting 2013 in Davos, Switzerland, Wednesday 23 January.
DAVOS-KLOSTERS, SWITZERLAND (23 JANUARY 2013) (WORLD ECONOMIC FORUM) - The day began with a robust debate about the state of the financial industry, now 5 years after the banking crisis. Min Zhu, Deputy Managing Director at the International Monetary Fund, expressed worry that the banking global system was still too big, too leveraged, and too opaque.
JP Morgan Chase & Co. CEO Jamie Dimon countered that banks had taken the important steps to clean their balance sheets and liquidity, and emphasised that a robust financial sector was essential for economic growth.Axel Weber, Chairman of the Board of Directors of UBS and a former head of Germany'sBundesbank, said global regulators were making the capital and liquidity rules for banks too complex across different jurisdictions and called for global standards.
However, TidjaneThiam, Group Chief Executive of Prudential, said that emerging markets had different concerns than more established jurisdictions, and would resist robust global regulations.
The 2013 Annual Meeting is attended by a record number of heads of government and heads of state, each with a variety of agendas to accomplish.
Costa Rica's President Laura Chinchilla is one of the most active, with bilateral meetings and panels heavily scheduled throughout her time in Davos. Two of her meetings Wednesday were with Mongolian President ElbegdorjTsakhia and Thomson Reuters President and CEO James Smith.
She has three main objectives: to participate in discussions about the Meeting's themes, especially sustainable development; to meet with a wide variety of CEOs to encourage foreign direct investment; and to promote the candidacy of current Trade Minister Anabel Gonzalez to be the next Director-General of the World Trade Organization.
For Guatemalan President Otto Perez Molina, one of the main initiatives in Davos is refreshing the world's approach to reducing drug trafficking, an issue on which he says there is unprecedented global momentum. He added that a challenge for the government in Guatemala and other Central American countries is to balance the need for resources to address the drug issue with the need to devote resources to other vital social and anti-poverty programmes.
Russian Prime Minister Dmitry Medvedev hinted at big changes to come during a panel discussion entitled "Scenarios for the Russian Federation," which was dominated by consideration of ways in which Russia might escape its past to modernise, reform its institutions and promote growth.
Medvedev, called up from the audience to address the session, spoke of plans to introduce political and economic competition within the Russian Federation. He then offered closer cooperation with the European Union, envisaging a visa-free zone and a single market "from the Atlantic to the Pacific."
Business leaders discussed managing through adversity, and whether companies have been too risk averse in dealing with the global recession.
Innovation in all its forms - whether cost-cutting or expansive - requires taking some risks, a move businesses are hesitant to make in times of uncertainty. But innovation does not happen in a vacuum.
Wal-Mart President and CEO Mike Duke called for dialogue on innovation in concert with the private sector and government.
John Chambers, Chairman and CEO of Cisco, said the pace of change is accelerating, which is even having an effect on how governments are operating. Companies that do not take risks will be left behind. Cutting-edge innovation is especially important in emerging markets, Anand Mahindra, Chairman and Managing Director of Mahindra & Mahindra, noted. That kind of innovation will help change the circumstances of the global poor at "the bottom of the pyramid" most effectively.
Several African leaders expressed optimism about the continent's economic growth and political stability. South African President Jacob Zuma noted the spread of democracy and stable governments across Africa, and said that was the essential element for economic growth and "De-risking Africa", the title of the session but a turn of phrase he rejected.
Nigerian President Goodluck Jonathan saw a risk that the unrest in Mali could destabilize all of West Africa, and he thanked the French for their work in the region.
One initiative to promote growth was announced by Rwandan President Paul Kagame, who unveiled that a commodities exchange would open in Kigali, as a first step to establishing a pan-East African commodities exchange.
Italian Prime Minister Mario Monti welcomed UK Prime Minister David Cameron's move to offer the British people a referendum on EU membership. Saying he was sure the result would be a "yes" vote, he underlined that the EU needs willing members, not unwilling ones.
International Monetary Fund Managing Director Christine Lagarde said that global economic recovery can continue, but called on the United States to keep the momentum going by avoiding mistakes, like not agreeing on a debt ceiling limit or passing a budget. She also emphasized the need for equitable and inclusive economic growth: "not just any growth, but growth that benefits all."