NEW YORK, NY--After the current global economic crisis subsides, Standard & Poor's Ratings Services' economists envision a much chastened world with greater regional and global coordination in banking and securities oversight, and the reversal of a long trend of deregulation and privatization in the financial services sector. Among the findings discussed in the report, "How Today's Turmoil Will Shape Tomorrow's Markets," are:
-- Risk aversion in the wake of declining valuations in the structured finance market, especially in the United States, will continue for the foreseeable future.
-- More coordination among regulators across national boundaries is inevitable.
-- As markets become more global, so will financial centers. We believe trading will be concentrated in more than one center, and three major focal points--in the U.S., Europe, and Asia--will foster 'round-the-clock trading.
-- Markets will become more dispersed, and secondary centers will become more important, but national financial capitals will remain essential for certain types of trading or for domestic
companies.
-- Securitization will likely be revived, but only in the simplest forms--at least for a while.
"The players and the regulators are changing, but exactly how remains difficult to determine," said Standard & Poor's Chief Economist David Wyss.(top right photo)
-- Risk aversion in the wake of declining valuations in the structured finance market, especially in the United States, will continue for the foreseeable future.
-- More coordination among regulators across national boundaries is inevitable.
-- As markets become more global, so will financial centers. We believe trading will be concentrated in more than one center, and three major focal points--in the U.S., Europe, and Asia--will foster 'round-the-clock trading.
-- Markets will become more dispersed, and secondary centers will become more important, but national financial capitals will remain essential for certain types of trading or for domestic
companies.-- Securitization will likely be revived, but only in the simplest forms--at least for a while.
"The players and the regulators are changing, but exactly how remains difficult to determine," said Standard & Poor's Chief Economist David Wyss.(top right photo)
"The trend toward globalization of financial markets will likely accelerate, in part because of capital injections from overseas investors into U.S. banks and financial institutions.
"The trend toward deregulation seems likely to reverse…We expect one result of the current turmoil to be a streamlining of the regulatory structure, even if the U.S. doesn't move to a single regulator as the U.K. has done," he continued.
"Moreover,"
adds Standard & Poor's Asia-Pacific Chief Economist Subir Gokarn, (bottom left photo) "the role of government in financial systems around the world will increase significantly, and conventional boundaries between the state and markets will be subject to challenge."
Across national boarders, our economists expect to see a re-intermediation of banking systems, especially in the U.S., where there has been more market debt than bank debt.
"Moreover,"
adds Standard & Poor's Asia-Pacific Chief Economist Subir Gokarn, (bottom left photo) "the role of government in financial systems around the world will increase significantly, and conventional boundaries between the state and markets will be subject to challenge."Across national boarders, our economists expect to see a re-intermediation of banking systems, especially in the U.S., where there has been more market debt than bank debt.
The European banking model of investment banking, we believe, appears to have won out as investment banks in the U.S. have been absorbed into other banks or have taken on quasi-bank status.
Media Contact:Michael Privitera, New York (1) 212-438-6679, michael_privitera@standardandpoors.com
Analyst Contacts:
David Wyss, New York (1) 212-438-4952
Subir V Gokarn, Mumbai (91) 11-4250-5113
Jean-Michel Six, Paris (33)-1-44-20-67-05
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