On the 6th and 7th of December, Finance Watch held the 2nd edition of the Change Finance Forum, which brought together various stakeholders to discuss and exchange, with high level speakers and experts, how to make the financial system serve the public interest and citizens. The event was also an opportunity to present the global “change finance” campaign for 2019 and beyond.
10 years after the collapse of Lehman Brothers, the situation is far from encouraging. The financial system is far from being reformed and most of the changes made are cosmetic. There has not been a separation between investment banks and retail banks, the toxic products which were at the root of the financial crisis in 2008 are still widely used, and many other issues with the global financial system were papered over or diluted via Quantitative Easing instead of being fixed.
Many solutions were proposed during the event to solve the challenges awaiting us, especially that of sustainable development and climate change, which is directly linked to the financial system and where money is invested. Some of those solutions include:
- Develop a resilience vis-à-vis the financial system via: local perma-culture projects, local currencies, crypto-currencies/blockchain, local cooperative banks and cooperative entreprises.
- Increase the oversight of the State over financial institutions: introduce a “public interest” test for all new financial products, more intervention on allocation of credit (credit guidance towards lending money into the real economy, especially sustainable development compatible projects), democratic oversight over the payments system.
- Separation of retail and investment banks (re-apply the Glass-Steagall act).
- Rules and regulations for hedge funds and private equity: include sustainable development goals in the investment decisions.
- Reign in bonuses and compensation schemes which distort the actions of the sales personnel in financial institutions.
The main problem does not seem to be “technical”, but rather ideological. In other words, these solutions may be technically viable and applicable, but are being blocked for ideological reasons, namely, that neo-liberalism is still, in many ways, a dominant ideology pervasive among academics, policy makers and private influencers.
Many conferences, at this point, discuss the next imminent crisis as an opportunity to change this paradigm and apply many of the ideas and solutions presented above.
For the year 2019, the two main priorities for Finance Watch will be the European elections and over-indebtedness. Typically, the financial distress that low-income households find themselves in have little impact on financial stability, which is why it has not been a priority for policy makers and why many misleading credit practices, sometimes carried out by non-bank creditors, continue to this day. Finance Watch will closely follow the revision of the Consumer Credit Directive and ensure that responsible lending be a core component of the revision process.
COFACE-Families Europe is an associate member of Finance Watch and will continue to cooperate with Finance Watch in bringing about a financial system at the service of society.
For more information about the event, please visit the official website:
Or contact Martin Schmalzried: email@example.com