June 29, 2012
Latham & Watkins convened a high-profile panel to discuss the policy and regulatory outlook in the midst of the eurozone crisis. The discussion centered on the prevailing political mindset for the creation of a banking and fiscal union of some sort to help address the financial troubles in the eurozone that continue to stymie economic growth. In particular, the panelists debated whether the policy and regulatory response could adversely impact the competitiveness of the City of London as a global and European financial capital.
Niall Ferguson, Professor of History at Harvard University, delivered a keynote address on the future of London in the context of the global economic malaise. Ferguson joined a panel of illustrious executives from the regulatory, finance and political fields to debate the hot button issues, including:
- Whether the eurozone will end in the break-up of the euro or banking / fiscal integration and the consequences for London as the world’s leading financial capital in the event either scenario plays out
- If the issues and decisions are largely out of the UK government’s influence and exclusively in the hands of the eurozone governments and ECB
- If there is genuine consensus among G20 countries for harmonized regulation of the global financial industry
“The distinguished panel of experts brought insightful — sometimes consenting, other times diverging — perspectives to the cornerstone issues. There is no swift and simple solution to the myriad complex issues; of this, all the panelists agree,” said Nick Cline, Managing Partner of Latham's London office. “There was broad consensus among the panel that we are at tipping point in the economic crisis and that London can’t be complacent if it is to retain its position as the pre-eminent global financial center.”
Niall Ferguson, Professor of History at Harvard University and best-selling author, said: “The macroeconomic issues and changes in the regulatory environment pose real challenges for the financial services sector. London’s clout in the global economy is inextricably linked to its position as the most comprehensive ‘full service’ financial capital in the world. We have a highly integrated, highly complex global financial network, where financial stress ripples through the system to create global instability. With London at the center of this financial nervous system, it is far from immune to the consequences of an escalating eurozone crisis.
“Excessively complex regulatory reform poses another serious threat to London’s pre-eminent position. However, UK and other Western governments and businesses need to recognize that the profound shift in the global balance of economic power from West to East is the biggest challenge to the West’s dominance,” added Ferguson.
Witold Balaban, Global Head of the Financial Institutions Group at Latham and moderator of the panel discussion, said: “The political will to vigorously address the sovereign debt issues that besiege the European economy seems to be mobilizing. Whether this translates into a genuine consensus among G20 policymakers for harmonized regulation of the global financial industry that is both sensible and consistently implemented across all the global financial centers remains to be seen. Whatever the outcome, regulatory reform that is not squarely rooted in the reality of the global financial market will be ineffective and will not hasten global economic recovery.”
Mark Field, MP for the Cities of London & Westminster and a panelist, commented: “As we continue to be engaged in the process of working towards a resolution of the eurozone crisis it is imperative, in order to ensure we safeguard the future of the City of London as a global financial center, that we do not allow the political arguments to outweigh the economic arguments.”
“Much progress has been made on defining the key principles and frameworks for global regulatory repair. The big challenge is to finish the job and especially implement and enforce the new rules. This is a major challenge for the G20, FSB, IOSCO and other regulatory bodies and jurisdictions. At the same time, we have to ensure that the economic impacts of the overall package of reforms are positive leading to a safer and sustainably sounder global financial system,” said David Wright, Secretary General of the International Organization of Securities Commissions (IOSCO) and fellow panelist.
About Latham & Watkins
Latham & Watkins is a global law firm with approximately 2,000 attorneys in 31 offices, including Abu Dhabi, Barcelona, Beijing, Boston, Brussels, Chicago, Doha, Dubai, Frankfurt, Hamburg, Hong Kong, Houston, London, Los Angeles, Madrid, Milan, Moscow, Munich, New Jersey, New York, Orange County, Paris, Riyadh, Rome, San Diego, San Francisco, Shanghai, Silicon Valley, Singapore, Tokyo and Washington, D.C.