Re-Define produces solutions to current and long-term public challenges and helps policy makers implement them
Finance Market Watch
Finance Market Watch - Coming Soon!
The financial system including financial markets is often referred to as the “brain” of modern day economies. When it works well it allocates resources efficiently, oils the wheels of the economy and helps generate growth and prosperity. When it seizes up, economic disaster is usually not for behind.
Despite the critical importance of the financial system and financial markets and their vast footprint on our daily lives, most people know little about how they work or how what happens in financial markets affects them. Policy makers and opinion leaders who do not directly work in finance are also susceptible to this ignorance. While this is already problematic when times are good, it is especially short-sighted at times when financial markets and the broader financial system are in crisis.
The lack of discussions and debate on financial markets is all the much more problematic given the special nature of finance. Higher informational asymmetries, systemic footprints and the critical importance of trust given the long term consequences of financial decisions and the inability to road test products all point to a strong need to engage more not less in understanding finance and holding it accountable.
At times such as now, when the current actions of financial market participants and decisions of policy makers will have enormous long term consequences for all citizens and stakeholders, apathy towards engaging with financial markets, financial policy making and the discussion on financial reform can have significant costs. It will generate sub optimal policy outcomes.
Why financial markets are different from other markets
When a grocery store fails, it is good for other grocery stores but when a bank fails it is bad for other banks and can generate significant systemic costs. If we will pay some of these systemic costs (as we all are due to the ongoing crisis), then we should also be more vigilant and engaged in understanding and monitoring the financial markets
If you buy a bad apple, you will choose not to go to the same store again but the time you will find out that the insurance you bought was not right will be after your house has burned down. That is why ethics and trust have a much stronger role in finance than in other sectors of the economy. Promoting an understanding of financial markets is a means to increase their accountability and temper unethical behaviour through greater accountability.
Our interactions with financial markets have long term important consequences for us but the degree of information asymmetry and uncertainty involved is high. No one ever buys a car without “road testing” it first; but we do not get a chance to “road test” our pensions or the choices that the global pension fund makes. That is why all of us need to monitor financial markets and the policy choices and regulatory decisions more closely.
Finance Market Watch
This is why there is a critical need for a Finance Market Watch project which helps strip away the complexity from finance and promotes a general understanding of and debate about the workings of financial markets and their footprint on the lives of citizens. Such a program will also work as a watchdog and help promote a more accountable financial system which would be beneficial for all stakeholders.
Having such a project that promotes an accurate understanding also of the tremendous benefits wrought by financial markets can help temper the knee jerk “financial markets are bad” reaction that is being increasingly heard nowadays. Through an informed discussion, public debate and an engagement with policy makers it can help strike the right balance between free market dynamism and regulated stability (safety) in the ongoing discussions on financial market reform.
Given our tremendous exposure to international financial markets through the sizeable Pension Fund – Global, Norway in particular would benefit from having a Financial Market Watch project. While Norway has excellent research and information capacity in many areas such as development, environment, peace etc there is a well-recognized information gap in the area of financial markets. Finance Market Watch will help address this gap.
In a day and age of internationalized financial markets, the Financial Market Watch project would also help strengthen the links between the national and international aspects of the financial system and will not only bring perspectives from international experts into national debates but will also help disseminate national perspectives abroad.
Finance Market Watch, a Public Service Project
The Financial Market Watch project will seek to inform, educate and engage citizens, policy makers and opinion leaders about the workings of the national and global financial markets with a special emphasis on the ongoing financial crisis and the discussions on reform and regulation. By doing this, we hope to promote better public policy solutions, which can help harness the innovation of financial markets for the public good while at the same time limit their negative footprint.
Re-Define, an international Think Tank seeks to set up the Finance Market Watch to fill a public service need to:
- help promote an applied understanding of financial markets
- use accessible language and modern communication tools to advance knowledge of how they wor
- generate an informed public discussion and debate about policy choices
- channel these discussions into proposals for financial system reform and increased accountability.
The Finance Market Watch project will work towards the following specific goals:
- Increase citizens' interest, engagement with and understanding of the workings of financial markets by clarifying how markets work, why and how they fail, how they affect issues that ordinary people care about (e.g. world poverty, climate change, pensions, taxes, job security and employment) and what individuals, governments and other stakeholders can do to improve the system.
- Promote an informed discussion – among policy makers, opinion leaders, journalists, academics and ordinary citizens – around policies and reform proposals to help harness the power of financial markets for good and provide an avenue to channel this discussion.
- Analyze and develop policy recommendations and Advance reform of national and global financial systems to promote better social and economic outcomes.