New Financial Architecture: Scenarios to 2020

The New Financial Architecture: Scenarios to 2020 initiative undertaken by the World Economic Forum through its Financial Services and Investors communities and Centre for Strategic Insight aims to explore the future of the global wholesale financial system and the role of existing and emerging financial players.

Background
In recent years, the financial services industry has been confronted by the rapid growth of “new” financial powerhouses such as petrodollar investors, Asian central banks, hedge funds and private equity firms. Research indicates that the assets of these four types of players have tripled since 2000, making them 40% of the size of global mutual funds, pension funds, and insurance companies. Today, they already represent more than 5% of the world’s financial assets. Many analysts believe that these “new” financial powerhouses will become even more dominant in the next few years.

Next to the rise of these new players, the FS industry has been confronted with some other fundamental shifts in the past years. For example:
• Rise of new financial centers and economic powers, e.g. BRIC, Middle East
• Changing market structure, e.g. exchanges broadened scope, dark liquidity pools
• Increasing frequency of financial crises, e.g. Asia/Russia/LTCM, dot-com bubble, sub-prime
• Macro-economic shifts, e.g. rising energy prices, inflationary environment

Fundamental questions
These key changes trigger a number of fundamental questions:
• Is wholesale finance and asset management facing a further paradigm shift over the next decade? If so, what are the key driving forces and critical uncertainties of the global wholesale markets?
• How may the future of the global wholesale financial system look like? For example: Who will be the dominant players? How may the role of the national and international regulators alter?
• How can the new financial powerhouses be effectively integrated into the global financial system so as to mitigate/avoid potential negative effects?

Project objectives
The objectives of this project are to:
• Create effective dialogue between key stakeholders, i.e. leaders from financial institutions (both traditional players and the “new” financial powerhouses), leading policy-makers, and senior academics on how the future of the global financial system may develop
• Create a better understanding of the key changes, challenges and opportunities
• Deliver a high-quality report that provides valuable insight into the future of the global capital markets and the implications (benefits and risks) for key stakeholders
• Provide an overview of suggested recommendations by leaders in the field on how to overcome the challenges and grasp the opportunities

Project workshops
The project includes a series of multi-stakeholder discussions.

2008

• May 18th: Project scoping workshop, Sharm El Sheikh, Egypt
• June 16th: Driving forces identification workshop, Kuala Lumpur, Malaysia
• June 23rd: Financial Institutions leaders dinner, New York, USA
• September 9th: Scenario building workshop, New York, USA
• September 25th: Scenario building workshop, Tianjin, China
• October: Scenarios affirmation workshop, London, UK

2009

• January: Future industry scenarios report launch, Davos, Switzerland

Additional workshops will be organized throughout 2009 to determine the strategic implications and options for the different stakeholder groups within the wholesale financial system.

Contact
For more information about this project, please contact:

Visit the Industry Partnership page

The World Economic Forum would like to thank Oliver Wyman and Clifford Chance for their involvement as project advisors.