Douglas Flint, HSBC Group Chairman, discusses how policy makers, regulators and the financial industry have to strike the right balance to allow the sector to support economic growth in a safe way. Mr Flint spoke at the Global Investment Conference 2013 in London, organised by UK Trade & Investment, where he chaired a panel session on safety and sufficiency: finance fit for the 21st century.
“As the world economy focusses on how to restore sustainable growth, core elements of the debate surround how best to harness the capabilities within the financial sector towards supporting that growth; how to build confidence that the financial system has the capacity and commitment to undertake that role; and how to reassure broader society that the system is resolutely aligned with its customers’ ambitions and interests, and in the event of unforeseen occurrences is structured to be resolved with least impact to the rest of the economy.
We are increasingly seeing UK customers looking beyond traditional trade partners to new emerging trade corridors
“There are two aspects to our discussion. The first touches on how the UK, working within the global regulatory response to the lessons learned from the recent financial crisis, is creating a stronger, more stable and more effective financial system for the long term. The second concerns the capacity of that more stable financial sector to operate as the transmission mechanism supplying the payments, credit and risk management services which underpin economic growth. Together, these two aspects form the bedrock of the UK’s economic expansion.
“In spite of lower growth in recent years, and suffering among the worst in the financial crisis, the UK remains one of the world’s most open, innovative and flexible economies. Previous economic and financial crises have sometimes given rise to a protectionist response. The UK response since 2008 has been the opposite of this.”
Mr Flint said that a speech by David Cameron, the Prime Minister, to the conference “gave a very effective tour d’horizon of the UK’s strengths, painting a vivid picture of the degree to which the UK remains an integral player on the global economic stage”.
He continued: “Our own experience supports this – we came to the UK in 1992 because London led the world as an international financial sector. These strengths remain just as evident today, possibly more so, and the UK’s commitment to supporting inward and outward investment flows is a key element of reconfirming the UK as one of the most important financial centres in the world.
“We are increasingly seeing our UK customers looking beyond the UK’s traditional trade partners to the new emerging trade corridors, particularly around China, India, Brazil and the Middle East. The centrality of the City of London to the global financial system continues to rise to meet the challenges of a new economic world order. That order will bring fresh opportunities most notably as China progresses in its internationalisation and pursues its ‘going out’ policies.
“The first ever renminbi-denominated bond outside Chinese sovereign territory was issued here in London, in fact by HSBC, just over a year ago. London’s emergence as the leading centre for the renminbi outside Asia is a reminder of its continuing ability to adapt and re-invent itself successfully in a changing world.”
Mr Flint said that balancing the competing priorities of all the various constituencies to deliver a workable solution without unintended consequences remained one of the greatest challenges the industry, its regulators and policy makers have faced. “It is an enormously complicated task.”
However, he added: “Happily it is no longer a debate about whether something should be done, but how and when. It is about managing transition, timescales for implementation and avoiding unintended consequences.”
These are extracts from a speech by Douglas Flint to the Global Investment Conference 2013 in London.