WS32 – Institutions of the financial sector

Workshop presentation

Money and finance are central to modern economies. Traditionally, money – a prerogative of the public authorities – organised exchange, while finance – of a more private nature – was supposed to put investors into contact with needs for capital, according to increasingly sophisticated methods, in order to absorb risks and prepare the future for the investor side and to finance economic development for the needs in capital side. Under the dual pressure of internationalisation of exchanges of goods and capital and of technological transformations such as computers and the Internet, the once separated domains of money and finance today represent a set of diversified actors ranging from central banks to pension and investment funds, and including the huge sector of banks and insurance companies.

The end of index-linking of the dollar to gold in 1971; the stockholders having taken back power over technostructures and the liberalisation of international capital flows; and, finally, the development of increasingly sophisticated techniques of risk management and mutualisation of savings embodied as much by hedge funds as by the major pension funds have put finance at the centre of the modern international economy.

For the last 15 years, the share of company profits and their redistribution to stockholders has grown to the detriment of the remuneration of salaried employees. The demands made by investors in terms of the profitability of equity capital carry great weight in company strategies. The Asian, Mexican and Russian crises at the end of the 20th century have shown the consequences of the volatility of capital. By bringing some of its banks into the stock market, China is now integrating itself more and more fully into the international financial system.

How, on both sides, do the financial institutions perceive themselves and take on their responsibilities and their role? What will the aging of the Chinese and European populations entail for the management of savings? Must we imagine new ways of cooperation and international regulation among the institutions of the financial sector?

These will be some of the issues discussed in this workshop.