In a context of economic recovery that is still uncertain for most countries, with monetary adjustments on the horizon, all economies will require significant amounts of resources to anchor their growth. Achieving this in a solid way will depend on which sources of financing are placed under strict prudential mechanisms. Although the exit from the stagnation caused by SARS-CoV-2 requires financial resources quickly and abundantly, they cannot be delivered under the parameters that gave rise to the financial crisis of 2008. In effect, that episode had unwise actions and policies such as scandalously low interest rates that later were in financing mortgage markets without rigor in the origination of the credits for their later transfer to other markets. Currently we cannot specify if that not very responsible attitude has disappeared due to the mere fact of the Covid. On the contrary, the need to place large sums of resources as soon as possible, presumes much more possibilities of repeating mistakes of the past than of not committing them again. Risks are still latent, in addition to the urgency to accelerate growth after a lost year with a notoriously uneven recovery environment, adding the shadow of inflation. The ingredients are given to configure bank failures, crisis in the markets or systemic risks. At this time we do not know if the global and local financial systems are prepared for bank failures of any scale or, for the lack of tolerance of the debt and capital markets to bankruptcies of large companies or, well, for the spread of risks between sectors.
Added to this is the challenge that financial institutions will begin to face to develop business models based on environmental protection. It is clear that the world has begun the transformation of economic and consumer structures to guide life towards caring for natural resources and air quality. Everything will be oriented towards green projects above any other that does not have a direct ecological impact. However, high levels of profitability are not immediate as it will be until the medium and long term when they are achieved. In this sense, there will be an alert forcing the system to reduce its profit margins in a short time. Climate change presupposes actions that involve immediate financial risk in exchange for minimizing ecological risk. It is not a minor dilemma that, in addition, requires deep adjustments in the management and mitigation of credit risks in all financial segments. In addition to the immediate challenges – global monetary adjustment, current 2008 record and the need for abundant resources – and the arrival of the green challenge, is added the accelerated emergence of the so-called techno-finance represented by cryptocurrencies, fintech and cybersecurity. We are then faced with at least three pillars of risks to which financial institutions will be subjected which, due to managing third-party resources, will have to face them with high prudential standards and foolproof ethics.
Doctor in Economic Development and Law
AUTHENTICITY
Professor at the Universidad Panamericana, Ibero and TEC de Monterrey. He has worked at the Bank of Mexico, the Ministry of Finance, in Washington, DC and in the Presidency of the Republic. He is currently studying for a doctorate in Philosophy with research in the field of ethics and economics. Author of books on economic history, financial regulation and public policy.
Reference-www.eleconomista.com.mx