In a recent Regulation Asia post, Starling CEO Stephen Scott discussed how the demands being imposed on the global banking system highlight the Achilles Heel of nonfinancial risk management and misconduct risk.
On 19 February, the S&P 500 reported it’s quickest ever retreat into a bear market. In a related story, the Financial Times produced a chart depicting this fall against other historical events. It is telling: this retreat was faster even than that during the Great Depression. The present contraction reflects the speed by which economic events can spread, contagion-like, in our inextricably linked global economy.
Banks are of course deeply caught up in current events. As the Wall Street Journal put it aptly, “banks can’t do social distancing.” Central banks seeking to forestall economic crisis will look to the banking sector to help pump much-needed liquidity into markets, and to help assure that those monies reach small businesses and perhaps even households.
The intermediary role of banks has long been their key social function, and we will rely on them playing this role especially well in the coming months. Banks have thus launched a coordinated global effort to win a relaxation of regulatory burdens, to include those targeting compliance related risks such as misconduct.