Good morning and welcome to the 2019 IIF Annual Membership Meeting here in Washington, DC.
This is our most ambitious Annual Meeting to date. We kicked things off on Wednesday and over the course of these four days the program will include more than 90 sessions, roundtables and side meetings – featuring upwards of 275 speakers and panelists.
This meeting, though, would not be possible without the generous support of our sponsors:
- Lead Sponsor: S&P Global
- Anchor Sponsors: PricewaterhouseCoopers, Qatar National Bank and Zurich
- Supporting Sponsors: Moody’s, Refinitiv, and Visa
- Contributing Sponsors: DTCC, DIFC, Fitch, Haver Analytics, and Tradeweb
Each year I take this opportunity at our Annual Meetings to share a few thoughts on what we, as the IIF, have been working on throughout the year and what to expect from us next year. Since January, my team and I have been hard at work, doing our best to serve you, our members. I’ll touch on our key workstreams in a minute, but first I want to call your attention to three metrics that demonstrate the health, relevance and global reach of the IIF:
First, for 2019, the IIF Board of Directors and broader membership approved a budget with a modest overall surplus - I am pleased to report that we expect to end the year within our approved budget and with a significant surplus. For 2020, we have developed a balanced budget that maintains an above industry average of reserves. In short, the IIF is financially strong.
Second, on the media and engagement front, IIF users have downloaded approximately 80,000 pieces of content from the IIF website over the last year and generated more than 1 million pageviews in the same time period.
Additionally, year-to-date the IIF has earned mentions in 2,800 different media outlets across the globe; including regular coverage in Reuters, Bloomberg, the Wall Street Journal, and the Financial Times. The more than 7,000 individual mentions this year puts the IIF on pace to match, and surpass, the previous record for media mentions set just last year.
Third, our events, like this one, continue to draw excellent participation from our global membership and feature leading voices from the public and private sectors. To date this year, we have held more than 70 events of different configurations and sizes in approximately 25 locations around the world. This convened more than 4,500 attendees from 74 different countries. Further, I am happy to report that for 2019 we gained three first-time sponsors and three multi-meeting sponsors.
This year, and looking ahead to next year, our work has been focused around a few key workstreams.
The first is sustainable finance. Following the launch of the IIF Sustainable Finance Working Group in early 2018, the group has rapidly expanded and now boasts more than 150 members. It was also honored this year by being named an official stakeholder of the Central Banks and Supervisors Network for Greening the Financial System (NGFS).
The working group has five key objectives: building capital markets solutions, mobilizing sustainable finance, supporting better disclosure of climate-related financial risks, scaling up sustainable investment, and supporting the alignment on approaches to analyzing, measuring, and tracking climate finance.
With biannual in-person meetings, quarterly conference calls, regular roundtables and workshops, and a new podcast series, “All about the Green,” sustainable finance and ESG-related issues will remain at the top of our agenda for the considerable future.
Market fragmentation has also been another key workstream this year. The IIF and many of you in this room have observed that an increasing number of jurisdictions, either to support the domestic economy or for financial resilience, are introducing national divergences or altogether new rules as they implement the post-crisis regulatory reform agenda.
A main focus of our advocacy efforts, earlier this year the IIF published a report that recommended measures to help promote a level playing field and reduce opportunities for regulatory arbitrage, including specific measures to address regulatory fragmentation and ways to enhance international cooperation among authorities.
Sometimes our priorities are dictated by outside events, take for example our renewed focus on our financial crime and digital finance workstreams.
We continue to find ways to enhance the global framework for compliance with anti-money laundering and counter-terrorist financing rules. Our work is focused on three main areas: regulatory engagement on AML/CFT policy reform; engagement in industry dialogue with regulatory and enforcement bodies on a global basis to enhance public/private sector cooperation; and enhancements in the use of technology to fight financial crime.
Just this week, we are rolling out a major report with Deloitte at our “Global Financial Crime Risk Roundtable” and have been engaging with relevant actors in the Nordic region to ramp up the public/private sector cooperation, which could become the basis for a pilot project that may be scalable in other locales over time.
The launch of Facebook’s Libra initiative reinvigorated the discussion around digital currencies, but our digital finance workstream doesn’t stop there. This year additional attention has been paid to financial stability and market structure, data policy, machine learning, cloud, digital identity, and financial inclusion.
In addition to new surveys, papers, symposia, and high-level engagement with regulators, standard-setting bodies, and cutting-edge leaders in this field, our podcast series, “Finance, Regulation, and Technological innovation” or FRT, has produced 50 episodes.
Finally, we will continue to hone and refine our economic research to evaluate risks and opportunities in the emerging and frontier markets, monitor capital flows and global debt metrics, and illuminate possible risks to financial stability.
There are a number of risks worth highlighting, including unfortunate idiosyncratic situations like Venezuela, Argentina and Turkey, but I’ll focus on two that have occupied the majority of my discussions over the last year.
The first is trade and the ongoing tit-for-tat conflict between the U.S. and China. Though the impact of tariffs has had ripple effects on consumer spending, business confidence, and global growth, equally if not more important in my view, is the effect it’s having on the post-war multilateral trading architecture and the benefits it provided to the global economy.
Just last week our Economics team released their semi-annual Capital Flows Report, which highlighted the unusual seesawing volatility of capital flows to emerging markets this year driven in part -- by trade tensions. Relative to last year, and on the back of several major indices’ inclusions, we expect a modest year-over-year increase in capital flows to emerging markets but FDI continues its concerning decline.
The second issue on my mind has been the dramatic rise in debt over the last decade. According to our latest Global Debt Monitor, the global debt burden now stands at $246 trillion. That’s close to the all-time high and represents a delta of $70 trillion since the crisis trough.
The figures are especially concerning for corporates and emerging and low-income countries. Emerging markets have reached a new high of $69 trillion, which is more than 216 percent of GDP. Here in the U.S., the total debt burden is nearing a record $70 trillion, on the back of government and corporate borrowing – each reaching new all-time highs.
In search of ways to support debt sustainability and debt transparency, and at the direction of our Board of Directors, the IIF spent the beginning half of this year engaged in efforts to garner G20 support for the Voluntary Principles for Debt Transparency. I am happy to report that we were successful and the G20 included support for the IIF’s work in both the Fukuoka and Osaka Communiques. We look forward to operationalizing these Principles in the coming years.
I want to reiterate that we will continue to operate and prioritize our efforts consistent with our mission, focusing on persuasive, evidence-based advocacy for sound fiscal, regulatory, trade, and monetary policies and any needed reforms to global institutions - ensuring that IIF remains a leading voice for the financial services industry.
To close, I want to go back to the key themes for this meeting: Debt, Data, the Defense of Markets, and the Rise of the Intangible Economy. I’ve touched some on the first two themes, but the latter two are equally important. We live in interesting times. Whether you take that as a blessing or a curse, it is not for me to say. However, we cannot deny that our lives are being transformed seemingly every day, and this can bring great excitement and great anxiety. Capitalism, socialism, progressivism, authoritarianism -- they are all under a microscope. New technologies are changing the contours of the future of work presenting us with great opportunities. But these opportunities are being distributed unequally, and some people are not able to reap the benefits.
These are weighty topics, and so I am excited to hear what thoughtful, insightful speakers like Ray Dalio, Martin Wolf, Richard Baldwin and many others have to say on these subjects.
Thank you again for joining us today. We truly have a fantastic program that I hope you will enjoy.