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Debate: Will Financial System Promote Global Growth?
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The financial system has to do more to support the real economy, Citigroup Inc. [C
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]chief executive officer Vikram Pandit and other high-profile business leaders said at a CNBC debate at the World Economic Forum in Davos on Sunday.
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Photo: Fabrice Coffrini | AFP | Getty Images Participant at the World Economic Forum (WEF) annual meeting snack under a sign on January 25, 2012 at the Congress Center in Davos. |
“One of the most important things in the U.S. is tax reform. That’s how we deal with the deficit.”
One of the key themes of this year’s Davos summit is the global financial system and what can be done to avert another credit crisis.
Paul Polman, chief executive of Unilever[ULVR-GB
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], told debate-goers: “There is an increasing amount of deleveraging which needs to happen in the euro zone, which will result in reduced growth. We will be focused on getting Europe competitive again.”
Delegates have argued that the banking system is not supporting the real economy and employment properly.
“We have got to recommit to those principles that create growth and recommit to globalization. It’s all about trade,” Pandit said. “It’s not about the public and private sector. They have got to come together through projects to build infrastructure.”
], told debate-goers that Japan's situation showed that it was very difficult to create jobs and growth when a country’s population is shrinking and its economy is stagnant. “If you look to neighboring countries which are rapidly growing, like China, you can expand there and hopefully provide economic growth back home – although the government will need to use the money gained in taxes for (boosting) domestic demand,” he said.
There was general agreement at the conference of high-profile business leaders and politicians that the European Central Bank’s
![[cnbc explains]](http://media.cnbc.com/i/CNBC/Sections/News_And_Analysis/_News/_CNBC_EXPLAINS/_IMAGES/CNBC_explains_icon1.gif)
long-term refinancing operation , launched in December, had helped inject more liquidity in the market and eased concerns about the credit crisis.
The backlash in public opinion against perceived excesses in corporate compensation was also on the agenda.
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“It’s got to be a meritocracy,” Pandit said. “We also have to be cognizant of the fact that we live in a market economy.
Pandit took a salary of just $1 after his bank became the financial institution that needed most assistance from the U.S. government in the wake of the credit crisis.
On Friday, German Finance Minister Wolfgang Schaueble repeated calls for a European Union-wide financial transactions tax which would increase the cost of trading.
High-profile bankers including Deutsche Bank [DB
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]chief executive Josef Ackermann have criticized the planned tax, and UK Prime Minister David Cameron has argued that the U.K. would be disproportionately penalized because the London Stock Exchange is Europe’s biggest bourse.
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