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 A poll of bankers, lawmakers, regulators and others attending the
World Economic Forum in Davos, Switzerland showed 61.7 percent
believed the financial system was safer than five years ago, while
38.3 percent said it had not improved.
"Markets are safer, and quite markedly so," Douglas Flint, chairman
of Europe's biggest bank HSBC <HSBA.L>, said during a debate that
preceded the poll of those attending the session.
"It would be a shocking indictment of the industry, regulators and
public policymakers if six years after a dramatic crisis efforts
hadn't been successful to make the system safer," Flint said.
Others disagreed, however.
"I don't believe the financial system and markets are safer and I
don't believe they are safe," Paul Singer, founder and CEO of New
York-based hedge fund Elliott Management, said.
"The leverage in the system, especially in derivatives, has not been
meaningfully reduced, and the opacity of derivatives and other
complicated securities has not been changed at all."
Complex derivatives have been blamed for playing a big part in the
financial crisis and regulators have tried to improve transparency
in these products.
Singer said countries that were the last line of support in 2008 now
had less capacity to help the industry, while many financial firms
still did not understand their risks.
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But Flint and Antony Jenkins, chief executive of Barclays <BARC.L>,
said increased capital and liquidity gave banks far greater capacity
to withstand shocks, recovery and bail-in plans should limit damage
to a bank in trouble, regulatory and supervisory resources had
swelled and the structure of pay had improved to discourage
risk-taking.
Management were spending a majority of their time on these
issues, and HSBC's board spent between two-thirds and three-quarters
of its time on regulation, oversight and dealing with legacy issues,
Flint said.
"It's very difficult to argue that the financial system is not safer
than it was in 2008, but the question is how much safer is it,"
Barclays' Jenkins said.
"We still have a significant amount of work to conclude the
implementation of all of the regulatory changes, and this will not
happen until close to the end of this decade," he said.
(Writing by Steve Slater; editing by
Jane Merriman)
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