Central Banks in Focus: Time to Risk It?

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I was just at an interesting lunch with Garry Kasparov, the man who became the youngest world chess champion in history in 1985 at the age of 22. He held the title as the world's top player for 20 years before retiring to pursue other chess and non-chess related interests.

Over our meal, Kasparov was vehemently arguing that we no longer take risk the way we once used to. There was once a time when a new ground-breaking invention or discovery was made every decade, which could either directly, or via its side effects, change the way we live.

For the U.S. to have spent the time, research, and money to put a man on the moon may, in 1969, have seemed pointless, but, as Kasparov pointed out, the way you use your smartphone today is a direct side-effect of the space research that was done especially in the Kennedy, Johnson, and Nixon era. Without the decision to take risk, both financial and human, there would probably be no satellite technology today. Kasparov argued that current innovation is measured, and that we have become an increasingly risk-averse society. And without innovation, real growth is stunted.

(Read More: Why This Week Could See Start of of Risk-Off)

I asked Yra Harris, a Partner at Praxis Trading whether he thought we were taking too much or too little risk, and he said he would prefer to turn the question around to ask whether we are getting adequate returns for the risk we are taking? Harris said that when he looks at where the best risk-reward scenario is, he still views equities as the preferred place to park money.

Looking at the markets, though we have seen tremendous recovery in various asset classes, the retail investor is still sitting on the sidelines, and money managers are questioning whether the gains are sustainable and based on anything other than stimulus from the central banks. Either way, the vast majority of fund managers I speak to still think equities will continue to head higher.

With rhetoric recently ramped up by a number of Federal Reserve officials calling for a tapering off of quantitative easing, the focus this week will for sure be on the U.S. Federal Reserve Chairman, Ben Bernanke, as he is set to speak twice on the state of the U.S. economy. May FOMC minutes are also published on Wednesday- the same day as the European Leaders Summit where tax policy is on the agenda.

A day later, on Thursday, the European Central Bank President, Mario Draghi, speaks in London where he, no doubt, will be asked to clarify his stance on further ECB cuts and potential negative deposit rates.

(Read More:Central Bankers Get Grades: Draghi Bottom of the Class)

On Friday, it's the turn of the U.K. with Bank of England Governor, Sir Mervyn King, speaking on "Lessons from the Financial Crisis", following on from the publication of the May MPC minutes on Wednesday.

Data you should be aware of includes the May German IFO business climate index (Friday), and flash Euro Zone PMI estimates (Thursday). In the UK, watch for the second estimate of Q1 GDP (Thursday), along with April's inflation (Tuesday), retail sales and public finance figures (Wednesday).

Louisa Bojesen is the anchor of CNBC's European Closing Bell. Follow Louisa on Twitter @louisabojesen