 When I read the emails from those traders, I got physically ill. Is it an illegal exhibition? Well, it's not a yes or no answer. We see evidence of systematic greed at the expense of financial integrity and stability. And they knew what they were doing. That behavior was reprehensible, it was wrong. I think it's sad to say that we were all disgusted by it. I would love to tell you that it won't happen again. But I can't tell you it won't happen again. You've got LIBOR and you're talking about the whole world. The cost of the LIBOR scandal continues to rise as another bank reaches a settlement. Now the global banking system getting another black eye from the standard chartered scandal, the British bank accused of hiding hundreds of billions of dollars in illegal deals with Iran. The last place you want to be a bank is the UK. We are here today to announce the filing of criminal charges against HSBC bank for its sustained and systemic failure to guard against being used for money laundering. HSBC did not live up to our own expectations, the expectations, and the expectations of our regulators. Bank of America announcing a $10 billion settlement with Fannie Mae over mortgage repurchases. VFA will pay $6.7 billion to buy loans held on Fannie's books. We passed reforms to make sure the Wall Street could not act in the same reckless manner that almost brought the economy towards its knees. The New York Times say, suggesting that the J.P. Morgan London Whale trading losses could reach $9 billion. The best of times turned out to be the worst of times for J.P. Morgan and the timing couldn't be worse. I can tell you this has shaken our company to the core. Hopefully the company will learn from it, wrestle it down, improve ourselves, and continue to do what we're supposed to do. You tell me Mr. Diamond, you seem too big to fail. I didn't go to Wall Street purely to make lots of money. I could have just left and walked out and said nothing about it. I'm not really concerned about the revelations. I tell you I'm not looking forward to the hoopla. The big news here, of course, the Facebook fallout. Morgan Stanley was the lead underwriter of the IPO. The stock down more than $8 since trading began. This is one of the most volatile openings to an IPO ever. And it was clear that the exchange handling issue of NASDAQ was having problems. You messed up. You got people very upset here. We have been embarrassed and certainly we apologize to the industry. We did everything right. It was NASDAQ's failure. This was arguably the worst performance by an exchange on an IPO ever. We are just getting news. Nick from Panda is stepping down as the CEO of Citigroup. He said to me, I would not walk away from this company if I felt that it was in bad shape. In the love partner, we need to get through this period. And the best way for me to do that is to step down. Bank of America said to be speeding up previously announced job cuts. Bank will cut 16,000 jobs by year-end. Around 10,000 people will leave the bank. This is the most painful part of what we are doing. Global banking regulators have watered down new bank liquidity rules. The banks, this had to happen today, didn't it? All of these are moving to the upside. European banks are doing well for the second straight day. Banking stocks have been rallying there, and that's in large part the result of news from global regulators during the weekend. And good morning. Thanks for joining us. I'm Maria Barturomo, and this is the global financial context where we are looking at the future of financial services due to new regulation and changes in the global economy. Joining me right now, a bold-faced group beginning from my right. Zhu Min is deputy managing director at the IMF. Paul Singer is principal at Elliott Management. Tijian Tiam is group CEO, Prudential UK. Jamie Dimon is chairman and CEO of JP Morgan. Dr. Axel Weber is chairman of the board at UBS and co-chair of the World Economic Forum, meeting former president of the Bundesbank. Andre Kostin is chairman and CEO of VT Bank of the Russian Federation. Gentlemen, good to see you. Thanks very much for joining us. Let me start with you, Dr. Weber. As a former regulator, now a senior executive at a major bank, can you talk to us about what we have seen? We have just watched this video of the banking sector under fire for the last several years now. How have things changed and how are you expecting the industry to evolve? When I came to the industry, I was under no illusion that the industry didn't have its issues. They need to be fixed and what we try to do at UBS is two things. First, I think banks need a new strategy and we embarked on a bold new strategy for UBS. It's the right strategy for UBS. At the same time, we have to deal with the legacy and in order to get on top of these issues, you really need to get at the bottom of things and for us, a settlement of LIBOR was an important step in going in that direction. These things need to be on the table, taxpayers want to know about it and transparency simply has to be there. When we found this issue going on in the bank, we completely made contact and complied with the regulators. We had a very good interaction with regulators. We actually helped them get on top of these issues and we separated from staff that basically was involved in the conduct that is completely unacceptable. It's not the values of UBS, it's not the values of Switzerland, it's not something that we can tolerate. So you need to separate from that past and that's a necessary condition for the bank and for the industry to focus on a better future and you have to do both. Shape the future with new strategies at the same time, basically get out all the issues from the past. There have been excesses, there have been problems in the good years, what we need to do is fix those more forward in a, in my view, different mode. But that's for everyone else to judge for themselves. Where are we in the fix, Jamie Dimon? Do you think that the industry can recover, come back from the attacks and from the misdeeds of the past? I think the industry has to come back from the past and I think a lot of companies are actually doing fine. Banks continue to lend and grow and expand. Finance is a critical part of how the economy runs or functions. You're going to have loans and movement of money and investors and presumably everyone I know is trying to do a very good job for their clients and a lot of banks since the crisis, JP Morgan Chase since 2008 has lent or raised 7.5, $7 trillion plus for people all around the world including governments, schools, cities, hospitals, small businesses, large businesses. That's our job and we try to do it very well and the whale mistake which you had up there, I just want to point out no customers was in vinyl. Terrible mistake. I mean if you're a shareholder might not apologize deeply. We did have record results and life goes on. It's amazing because you were the most profitable bank even after the $6 billion mistake. And as you say, it was a trading mistake, not necessarily what we're watching in some of the other headlines, human. Yeah, well I have to say you have a good question whether the industry will come back. I would say it depends on how you define the concept of comeback. The profitability is a key issue but it's not the only issue. Before the crisis, after the crisis we were asked why we had such a huge crisis. Number one, the financial sector is too big. Number two, a lot of the traditional intermediation move into the market-based activities. Number three, the product is too complicated and also the transparency is not there. Those are three major things. If you're looking for today, the financial sector has a still account of 366% of GDP. I mean the banking assets, equity market, bonds market, roughly. Still too big. Leverage ratio is still way high. If you're looking for the intermediation move into the market-based activities, you will see the wholesale funding still account of 366% of global banking sector, more or less the same thing before 2007. You will see the banking balances today hold on by non-banking financial institutions still in the United States at 68%. You will see the market-based activities still there, not reduced at all. The product is still very complicated and the shadow banking still there is not under fully regulatory framework. So I would question or say, we need to carefully define when we say whether the financial sector will come back or is come back, it depends on how we define. In that sense, I would say the whole financial sector still have a long way to go. You say the banking sector is too big. Yeah. Show of hands in the audience. Who agrees with that? The banking sector is too big. Panelists, who agrees with Jumin? Andre, you're nodding your head. No, I mean, everybody is blaming the banks, at least politicians. Remember here, Mr. Sarkozy was very critical five years ago on banks. But look, we are now talking that the industry effectively came back. We are making good profit. We are making good growth. Who is in the worst position? European banks. Why? Because they bought too much sovereign European government debt. Who is responsible for this? Who made them to buy this debt? And who is not in a position to serve the debt? Is it banks or there's a government? So you blame the government? I'm not blaming anybody. I think what's happened here in Davos was very important five years ago. When we sat together, bankers, regulators, governments, and started to talk how to improve the situation. Yes, banks, we took too much risk. But we took much risk because the situation was such that everybody enjoyed the life. The governments, the regulators, the bankers. The people. The people, of course. People still enjoying. In Russia last year, Russian banks increased loans to Russian people, consumer loans, by 40%. People are borrowing. They're enjoying. They're buying flats. They're buying cars. They're buying other things. So, yes, we should have better regulations, but better, not necessarily more regulations. I recently spoke to one of the top officials in the Russian central bank. I said, what's your dream about the capital adequacy? He said, 100%. Between 100% and zero, which we want, still a long way for compromise. I think we should find this compromise and make the industry efficient because this sub-main subject of this Davos is resilient dynamism or growth. We will not achieve growth unless we have a proper financial industry which lend money, which provide money for further economic growth, and that's a very top on the agenda for the whole global world economy. For me, if I may, Maria, this reminds me of a text I think we all studied. I can't remember if it was Plato or Socrates, but when we were 17 or 18, the rebellion of the limbs against the stomach, where the limbs say, well, everything we do is for the stomach, but tyranny of the stomach is intolerable, so they stop feeding him. So of course they stop feeding the stomach and the body decays and everybody dies. So this whole debate about the financial sector is a false debate for me. You take a company like Prudential, we have a largest investor in the Indonesian economy, we have a largest holder of equity in the Jakarta stock exchange. We hold 30% of the Vietnamese government debt. We do the same thing in every country we are. Where does the financial sector start or stop? Where does the economy start or stop? It's so intricately linked. I mean, that's what we're all saying here. But we shouldn't throw the baby with the bathwater. Yes, there were issues, yes, there were excesses. I said it was very clear about that. They have to be fixed, but we will not get any growth. And the economy, the world economy will not get out of the crisis in which it is without a functioning financial sector that can intermediate finance companies, finance households so people can go to work thinking that they have insurance on their house so that they can be traded. They'd be no trade without insurance. We all perform a very valuable social function and I think that's a key point to agree on before we move on in the debate. But I think challenging, and I don't know anybody, nobody can say what is the optimal size of the financial sector. I don't think it's a very productive debate. I think what needs to happen is for us to be able to do what we do best which is provide value to our customers. I'm going to hear from Paul and then I want to get the conversation going but we haven't heard from you yet, Paul, go ahead. I don't think the banking sector is too big. I think it's too leveraged and too opaque. If you go back to the crisis of 08 where the global financial sector was, was in a place where the growth of derivatives over the previous 20, 30, 40 years together with the migration of the large banking firms into a combination of classical banking and becoming the largest trading firms in the world, that combination plus the opacity of the derivatives disclosures and the gigantic size of those exposures made for a situation in which, in my opinion, only the implicit and explicit guarantee of governments stemmed the cascading transmission of the financial collapse. If you fast forward to today, what you have is a significant amount of deleveraging on balance sheet, much less deleveraging in the derivatives books of the major global financial institutions. What you have is the same inability of outsiders to understand the financial condition of the major financial institutions and still this combination of classical banking activities which are in many cases underwritten by deposit guarantees, by governments, together with trading. And what proportion of the multi-trillions of dollars of assets and liabilities or things that are like assets and liabilities, what proportion of those are real positions of a similar risk profile as balance sheet assets is completely opaque. So to me, part of the answer to Maria's question of coming back is a global financial sector which is big enough to do the job and you need big institutions, but sizing isn't necessarily unsoundness and I wouldn't say that the global financial system is unsound, but one doesn't know from disclosures and one can't find out from disclosures whether global financial, you know, each of the very large global financial institutions are actually risky or sound and I think that's something that needs to be fixed by global cooperation. Who fixes that? Who's job is that to fix? Regulators. Jamie, do you want to jump in? Paul, I would all do respect. Hedge funds are pretty opaque too and the fact is you've made this comment publicly and I called you up and said, what is it you'd like to know? You probably have not read our 10K which is 400 pages long. We break out assets by loans, by quality, by type, by industry. We break out derivatives by maturity, by ratings, by collateral. We have $200 billion today sitting in central banks around the world. So businesses can be opaque. They're complex. You don't know how aircraft engines work either and there will be a financial services business. Loans, equity, capital markets, mortgages, all those things will be required. They'll be provided inside banks or outside banks and they'll do respect to men. Since the crisis, there are no SIVs. There are no alt-A's. There are no subprime mortgages. There are no off-balance sheet vehicles. There are very few CDOs. Most of the exotic derivatives have disappeared and they're just kind of running off the books and stuff like that. There's twice as much capital in the system as it was before. All banks were required to bail out. Some banks were a port in the storm because they were strong and diversified. I'm not just talking about J.P. Morgan. There were lots of them out there which reports in the storm and help countries survive and stuff like that. It's very easy for people on the sidelines to sit there and say, I'm going to share some of the audience here. A risk management issue for you because I think J.P. Morgan was not just a fair weather friend. We were there in good times and bad times including nations. So for Spain and Italy, we today are lending $15 billion net of collateral and net of derivatives in short, Spain and Italy. And yes, it's governments and it's basically multinationals if you want to be transparent. What would you do? What would you all do? If you were my board of directors, it's very easy to say, don't take the risk, move on out. We've been in Spain and Italy one for 60 years and one for over 100. We're not a fair weather friend. Spain and Italy and the companies there and stuff want us to be there. We have to manage that risk. Something may go wrong. I may be sitting here for a year from now and you're all going to say, I told you so. But I think we're still doing the right thing. We're taking risks to do that. And so I just, I think there's so much misinformation out there that's used aggressively by people for their own purposes. Paul, you trade with us, right? Quite a bit. Very happily. Why you do that? Research, execution, capital and price. We provide a service to you. We make a little bit of money every time we do it. That's what happens. What about that, Paul? And the FDIC for the folks in the room, the FDIC insurance guarantee is paid for by banks. So yes, it's a government guarantee, but J.P. Morgan-Chasell has paid the FDIC, will pay over like a five year period, $5 billion to pay for the failure of small banks. So it's not that one side of the street. It's great to have the opportunity to continue my conversation with Jamie in an intimate setting, so I appreciate that. And he's right about, in a way, about the opacity of hedge funds, but I would remind everyone that no hedge funds supplied any systemic risk in the 2008 crisis, and it's for a very specific reason, a very important reason. Most of us, almost all of us in the hedge fund community, and I don't deign to speak for hedge funds, but I know a little bit about the industry, most of us, or almost all of us, are customers of firms like Jamie's and Dr. Weber's, Dr. Weber's, and as such, we have credit departments looking over our credit and all of our positions all the time. What the 2008, and Jamie, of course, runs one of the most widely respected large financial institutions in the world, but what 2008 showed is that many financial institutions didn't actually have a handle on, nor did their regulators, on the nature of their risks and the risk models that were being used were not adequate to describe transmission mechanisms. So I'm not saying in any way that the system or any institutions, a group of institutions, is unsound and all of the things that Jamie said about the risks that they take and the services they provide, as well as his colleagues, of course, is accurate. What I am saying is the path to normalization and a crystal clear ability of global financial institutions to exist outside of an implicit governmental guarantee partially is dependent upon more deleveraging, more disclosures and in answer, just one more point, in answer to Jamie's question about the kinds of disclosures my June report to investors contains a host of disclosures that my team of 150 investment professionals would like to see, because every time I say we have a billion dollars with this firm or two billion dollars with this firm, please tell me chapter and verse about their financial condition after weeks of analysis and discussion, people come in and shrug and that actually describes the ability of people to outsiders to understand the financial condition. So I'm just making the point that deleveraging, separating, trading, actually trading and trading positions from the deposit guarantee positions would be extremely useful in normalizing the global financial system. Would you be able to get the same service if J.P. Morgan were a smaller bank? Would corporates across the world be able to get the financing that they require if J.P. Morgan were a smaller bank? I'm not against big size and the answer is maybe not. Jumin, what about you? You said the banks were too big. We just appear observations. I found it very interesting. We hear different view from banks and from hedge funds but look like those two people happily doing business together and want to continue doing business together which is fantastic and also interesting. I think it's also good. My view is, sorry and so on, we're not only talked banking sector. Jamie always disagree with me but I always disagree with you. I agree with you, Jamie. Some banks are cutting off the balances and move the special proper vehicle off and capture trading a lot of things going on in some banks but not all. I think you probably will agree with that but I think a more important thing because this is about the financial sector. We have to look for the whole financial sector. The question no.1 is still too big. The whole thing. Because we see a lot of activity move away from bank to the capture market where I bring more of back and the less regulations. So the whole sector, 266% of GDP is still too big. You mentioned the overcome derivatives and notional value before crisis 476 trillion today 467 trillion. I'll move the same. Zero deleveraging. The size is still big. The product is still complicated and the market-based activity actually not decreased but increased because a lot of activity is moving away from the banking balances but overall the financial sector. I think this is absolutely important for us too when we assess the situation. Not only for a banking sector not only for a bank but for whole system in terms of system while I will say still long way to go. If anybody looking for a smaller bank can come to VTB to us. No problem. But you have to look at the driving forces of what is changing the banking industry. One is markets where central banks all are at zero rates or close to that. Balance sheets have grown usually and there's just a very flat yield environment around. So traditional banking maturity transformation doesn't work as much anymore in that environment. Second driver in the market I think the bigger one is regulators. Regulators have clearly made up their mind to your question banks are too big. Some have said I think Mervyn King are too big to fail they're too big and that's why if you look at the new regulation it will drive banks over the next few years in a direction where say the trading book which is grown by a factor 7 actually the banking book hasn't grown that much and what regulators will do with new capital requirements for trading book with new netting procedures with all of this stuff is reduce the size of trading book and in addition they're having capital and liquidity requirements they're trying to ring fence and deposit taking part of banks and so the future for banks will be quite different in that environment and when you're positioning your bank you also have to acknowledge unfortunately and that's the one area that I do regret but regulators haven't moved is when we started this process and I was a regulator the expectation was we'll have a level playing field environment for regulation of the global banks a global standard this is not happening we have Basel 3 but we have different implementation deadlines we have material non-compliance with Basel 3 in the US and in the EU we have ring fencing initiative that are under the name of Volcker in the US Vickers in the UK and other countries like Switzerland have decided not to embark on structural measures but to simply do it all with a 19% alpine capital requirement to basically put a big buffer in banks so that if there is a problem again they can eat in their capital without getting into a problem well this is a very important point should there be a global standard I mean could there even be a global standard absolutely and you need a global standard for global banks like UBS or JP Morgan and others if we operate in all of these constituencies if we have to fine tune our regulatory another environment to different ways of ring fencing to different ways of bailing in capital cocos in Switzerland bail in bonds with recovery potential in the UK and in the US just regular bonds it just becomes very complex and what Jamie mentioned is very important what regulators wanted to reduce is complexity now they've reduced the complexity of the product space and of the funding issues but they've increased the complexity of the regulatory, legal and resolution environment so by and large banks management hasn't become less complex it's become more challenging for global banks and I think that's what we need to address the global environment for banks that want to be global players and then within that environment everyone can focus on what they do best we at UBS want to focus on wealth management in this race of the hair and the hedgehog to 2019 when the new standards are there we want to be the hedgehog we want to build the bank of the future that focuses on capital requirements at the end of that road rather than adapting over an increasing set of more stringent requirements that is road but by and large you cannot do that in a systematic fashion if regulation among different entities and different constituencies is different you need a global regulatory standard and global regulatory rules for differentiating between the trading part and the deposit taking part if that's not standardized it will continue to be a very global, very complex global environment and operational risks in that environment and legal risk will be much bigger than the financial risk and the investment risk that we have dealt with operational risks are coming to the fore and complexity is adding to those operational risks and that's not a good trajectory to embark on just a word on that maybe to bring an emerging market perspective to this because we're a company making more than 60% of its profits in emerging markets I think we shouldn't turn this debate in just a western debate when you're sitting in an emerging country where the financial sector has not blown up you listen to all this conversation with how can I say this, a bit of astonishment so I agree with Axel but a global regulatory standard is desirable, I think it's going to be very difficult to achieve because countries across the planet are in very different stages of development where the financial sector plays a very different role if you're a bank in Indonesia they want to invest 437 billion infrastructure in the next 5 years you are engaging the long term financing of the economy to increase the growth potential of the economy you are not interested in the debate we're having here and the regulator will not be very interested in engaging in this because that is not his concern well this is totally contrary to what Axel just said so then you're saying it's impossible to have a global standard because those economies that have not blown up in the financial crisis are saying why should we accept these rules they're going to be diplomatic I'm saying it's going to be very challenging I think we can have minima that we agree on but as financial institutions we have to adjust to a new world I think the world has changed it's not going to go back to what it was before the fact that regulators driven by local politics, domestic politics feel now more accountable to their taxpayers they think that their number one duty is to protect their taxpayers and that is a centrifugal force towards a less integrated model where we have probably to hold more capital it's not very efficient but that's the way it is we have to hold more capital by geographies and we have to learn to operate in a more multipolar world with several different poles where it's Hong Kong and Singapore and Jakarta and New York and Washington I don't think it's going to go back to what it was before I agree with Dr Weber very strongly that the standards need to be global in the absence of global standards on many of the dimensions we've been talking about there will be a race to the bottom and you'll find that capital and structures and structural avoidances of what major countries are trying to achieve will occur and defeat the purpose of trying to fix what's broken something Jamie has said repeatedly in the past and that is we shouldn't be discriminating against the largest institutions it is not size that provides systemic risk you said it was leverage and opaqueness leverage, opacity accounting standards but also systemic risk can be and is provided by medium size even smaller size firms similarly situated cascading transmission of losses is something that we saw in 2008 and we might see it in the next financial crisis even more abrupt and sudden because many people not only hedge funds but trading desks of firms like theirs are very sensitized to the risks to the lessons of 2008 and the lesson is especially because of the opacity and leverage hundreds of trillions of dollars of notionals of course that's not the measure of risk but it's a starting point and there's no ending point that makes sense in the analysis of risk and so the next time the lesson of 2008 was act first because you can't really figure it out and that's why the standards need to be global we need not to discriminate against the most effective and large institutions and I think that's a path to a financial system that fulfills its role as the plumbing of the global economy and you don't think saying that the industry is too big is discriminating that's not what you're talking about too big to fail no institution should be too big to fail but mere size is not the measure of risk we have a lot to add to one thing so when we talk about regulatory framework it's not only about capital ratio it's not about the credit coverage ratio by those three there's a whole spectrum, whole issues how do we intensify the supervision on the G-SIFIS global significance intonation finishing in SEWS we don't have the answer for that yet and how do we put the regulatory framework on the shadow bank we don't have that yet in the U.S. we start talking about the regulatory policy on the money market funds still on the U.S. the shadow banking strings but otherwise in the Europe the shadow banking increase over the counter derivatives shadow banking being private equity hedge funds there's all this trust all those money market things all those hedge funds still don't have a clear regulatory framework policy at all should they face the same regulations that the banks do? it's not the same but I would say both the bank and the shadow bank should have a proper regulatory framework to guideline them not necessarily being the same but we're still not there yet derivatives, over the counter derivatives we have been talking about this is a big issue as I say there's still 467 trillion no she knows I'm going to tell you about the process reading this forum talked about reading two years ago everybody talked about reading what happened today accounting standards all the Basel 3 is a basis on accounting three years ago right after class there are so many discussions debating in this building this room about accounting standards where are they? so the regulatory framework is not only the capital actual issues. Not even the creditors. So whole things, I would say the Basel 3 move forward, implementation still a big, big issue, but progress really uneven. There's a daunting task waiting for us. So I would say the regulators, authorities, and really including us in financial institutions, we play very important role to draft the principle instead of working together. But also the financial institutions need to start working on the anticipated things, so they will be able to make the system safer. Jamie? It's five years after the crisis, okay? We still haven't fixed a lot of things you're talking about. Part of the reason is we're trying to do too much, too fast, everyone thinks that that one thing is what sunk the system, there's huge misinformation, we should, we just focus the basis. Capital, liquidity, derivative to clearing houses, leverage, totally agree with it, all those things. And I think there's a whole bunch of stuff like, I just want to point out, largest financial catastrophe of all time, Fannie Mae and Freddie Mac. And I can go on and on about things that have nothing to do with banks that collapse, I agree. So we should focus on those things. I also want to go just back to this point about financial services is, it was over leveraged, they made too much money, I'm not saying all that, that's true, but just a very basic thing. If you were in a barter society, there are no financial assets. Once a society starts to save, there are financial assets. You want financial assets. The more it saves, and the wealthy it is, the more financial assets are, and you need financial markets to save and invest, with loans or investments. And so I think the United States is one of the best, widest, deepest, most liquid, and most transparent capital markets in the world. It's almost a venture capital, hedge funds, private equity banks, even some of the shadow banks, the word shadow implies bad, they're not all bad, they do, they serve a, some serve a function, some don't. So I also want to just point out, so you want financial service to be, you just don't want to be leveraged and blow up. And the last thing is derivatives, because I've heard this might, you know, almost every major company uses derivatives. They don't do it because banks want to do it, they do it because it's in their own self-interest. 85% of them are interest rate swaps or FX, to manage those two big exposures, those are good things for people to do. The standardized stuff should go to clearing houses, there should be some room for bilateral, I think the regulators should have transparency into it, and they actually have more than people think. And, you know, I wish the world would sit down, get the people together, fear we've got to fix now. But now it's just, I agree with, we have so many things coming, it's not going to fix, it's just going to, but it's been five more years pointing fingers, scapegoating, using misinformation, and think we're making a better system. In the United States, five years, we don't have mortgage rules yet. Though I think the CFPB just came out with a decent set. But it's just the beginning, now we've got to get seven other agencies to agree. So it's a very complex thing which we should make a lot simpler. What's taking so long? How come no Freddie May? How come no Freddie Mac? How come no mortgage rules? Any thoughts on that? In the United States, we made it, we made it more regular, it's not less, we diversified things, and everyone's responsible. So you said who's responsible for mortgages, HUD, justice, AGs, OCC, Fed, CFPB, it's just too many, you'll never get agreement quickly if you set up a system that way. And how are you going to get a global standard? No, it's a very real issue, because if I take the example of insurance, we have solvency too in Europe. It's been going on for 11 years, it's about five years. Someone said we're going to come up with one solvency regime for all insurance companies in 27 European countries. The only problem is they forget that those 27 countries have 27 different starting points, which they reach through their own history. The way insurance is distributed is completely different. The way redistribution pensions, intergenerational transfer is organized is completely different. The way companies are structured is completely different, and someone thinks that they can come up with one answer, in one go, that's going to work for those 27 systems, so far it has failed. So all I'm saying, and what the companies are saying, by the way, the UK insurance sector has spent three billion pounds at this point, building systems to operate on the solvency too. My company spent 100 million pounds last year building that, and I mean, I drove, yeah exactly, I drove saying look, you want to increase capital in the industry, well stop that, we'd have three billion more capital immediately. So I'm joking about it, but there's a more serious point behind it, which is that what we companies are saying is there needs to be a dose of realism in all those efforts. We understand the intellectual argument behind those reform efforts, we're saying they need to be less ambitious, they need to be more sensible, and they need to produce results in a reasonable time frame, because really the world in 2014 is not what it was in 2002, the concept developed in 2002, but we're all hardwiring in our systems, today it don't work. So there is a difference of speed between the speed at which regulation can move and the speed at which the real world moves, and there's always a disconnect there. Well, I think what we're missing here in the debate, to some extent, is go back to the regulators, look at their plan, their big plan of what is evolving. There is a concentric set of rules that are being built. The core is around really sealing off retail deposits in those institutions, clients money. And in the UK there's a debate whether that fence should be an electric fence. So none really not being able to penetrate that. The wider area is everything that is not deposit taken institutions, downsizing, pushing risks ultimately out into the shadow banking area, which is sort of another ring, the shadow banking regulation. But regulators really took it from the core. They first tried to prove the core part, bullet proof, then moved to the regulation of the larger part, the investment bank, and everything else through capital liquidity, resolution regimes, too big to fail, all of these debates. Ultimately, what they'll do on shadow banks will be, in my view, not very strong, because what they're trying to do is basically regulate the interaction, the interlocation of Paul's entity with us, so that when we do business with Paul, say Brian Brokerich or dealings, that they will try and make sure that we know the risk appetite and what our lending to Paul and Eliot, how risky that will be. So we have to form an assessment like with every client. They will not embark on capital rules for shadow banks, in my view, unless those shadow banks choose to be listed companies, so they need to fulfill certain requirements for listing and transparency. But the core of the banks will be what is regulated. And I think there, the regulators have a very clear timeframe of doing that over the next few years, and they want to make sure absolutely that every institution can fail, partly by spinning off the non-retail part and making that more resolvable, and partly by downsizing that part of the bank. And that will be different, again, across the globe. I fear very much that there are totally different momentums visible in the different constituencies. Take the US. The US is 70% of a bank's balance sheet comes from capital markets and lending to corporates is a much smaller part of the US economy. In Europe, it's just the other way around. Corporate investment funding comes basically 70% from bank credit, and only 30% from capital markets. There is no sizable corporate debt market outside the US. Only the US has a well-developed liquid high-yield market. Regulators are working on trying to develop these local currency bond markets around the globe. As long as that's not happening, the US trajectory into capital markets will be quite different to what we will see in Europe, in particular as in Europe lending to weak peripheral banks and countries has tied up a lot of the legacy assets in the banks and new lending is mitigated by the exposure banks have in their balance sheet. So I think the avenues that banks will travel will depend very much on the starting conditions, bank-based systems versus capital market system, on how much capital is tied up with legacy assets and how liquid those assets our banks have in the balance sheet and how dominant the non-banking sector, the shadow banks are in the market and in Europe clearly that is not a big market for those players outside the UK and some European peripheral, some European countries. Andrej? I think if we want to be realistic, when we talk about global relations, we first of all should talk about G20. There should be two-speed process. One is for G20 and that's already the process has started and moving and Russia is chairing G20 this year. I will push this forward. In Russia, for example, we're reducing this year Basel 2 and Basel 3 once at the same time, which is not hopefully easy for banks, but we'll be doing this. So I think first of all, we should talk about G20 process and then we'll implement the global supervision and the regulation. G20 we can spread it to the rest of the world. That's my opinion. Shuman? Yeah, I think Jimmy has a point. In the past five years, we tried to solve so many things and so many things. As I mentioned, there's a lot of things on the table not solved yet, but we also should not forget we just experienced the worst financial crisis since 1930. 200 million people still don't have a job today. And as I said, with all the debating going on, the financial market structure doesn't change very much. We're not safer yet. So in that sense, the debating whether we need more regulations or it's overregulated or the financial sector is doing not enough, it's important, but it's more important. I think we're in a critical junction. We need a government, need a regulator, need a financial institution walking together to find a solution to solve this issue five years on the road now. If we're still debating whether we have too little regulation or too much regulation, we're making a huge mistake. I would want to ask people in the audience whether who vote for more regulation or who vote for less regulation, you probably get a 50 to 50. Let's do that. How many for more regulation? And how much for less regulation, but different regulation? Oh, this is a double, come on. That was a majority, a majority. It's a terrible question. We make everything binary, more or less. You want good, strong, proper regulations. How do you get that? You don't want taxpayers to pay, big banks should go bankrupt under the rules in a way that doesn't damage economies. And even this liquidity ratio thing, they made a couple of little changes and have headlines where regulators give into banks. No, there are right and wrong answers. There are a thousand things in this leverage, in this liquidity ratio, we should get it right. It's not like more or less. And until we stop this binary argument, we're not gonna get to the right place. And yes, we need collaboration. Do the regulators understand? I mean, Axel is a perfect example because he was a regulator and now he's at a bank. Do you need the bankers to go the other way and take the regulatory job so that they have a better understanding? Is there an understanding, do you think, of how the banking sector works, truly? Well, Jim, you were with a last candidate. Look, I think there are a lot of bright regulators. I think they're also overwhelmed. You know, they're overwhelmed with rules and regulations and remember, they were given a lot of these tests to do by legislation, which, you know, that's what democracy has the right to do, but I think they're overwhelmed too. Maria, you're making a very serious point, actually. The association of British insurers is working closely with the Bank of England to organize a swap of staff. We actually all agree, but that is desirable because it doesn't matter how smart people are. There's no substitute for first-hand experience. And I have someone on my team who came from VFSA and he's been re-amazed by what is found out coming inside the company. It can work both ways. I think that's a very good thing. It's not about giving in from the regulators. State-liquidity standards. When the Toronto Protocol at the start of the new regulation was there, there was one sentence that was key to every regulator. We will face in the new regulation as the recovery is assured. Now, quite clearly what we saw at the end of the year could not be described as a situation where the recovery was assured. And so what regulators did, they took that into account, they basically phased in the liquidity requirements rather than at 100% in 2014. Over a couple of years, the large majority will come and they understood that the menu of assets, very liquid assets that are in these liquidity ratios was too narrow. It applied, say, to a liquid treasury market, but it doesn't apply to a European environment where such corporate and other debt markets aren't well developed. So the regulators took a interactive process and decided to take a slightly different route but go along to the same trajectory. And I think by and large, what we will see going forward is regulators will become sensitive how this is being phased in because we're seeing repercussions of the regulatory environment in the global economy. And that's gonna be very important. It's a sensitivity that needs to be there, but it's not questioning the way they're gonna go. So I think it is sensible to do that. It's responsive. But we've talked all the time so far, and I wanna put that on the table just as we're closing in to the end, we talked about capital, liquidity, shadow banks, and all of these big issues. The public perception of how banks are going to go about will be largely shaped to the response that is also there for other issues like governance, like how we deal with legacy issues, and how pay in the industry and how renumeration systems evolve. That's a core area where the regulators so far have taken a pretty descriptive, I would say, 10,000 feet high level attitude of principles in the hope that the industry responds to those principles. If that reaction doesn't come about, and it clearly will not be there in one year, and we're already seeing in this pay season that there is a gradual transition only, but if that transition doesn't happen, we'll see a lot more descriptive and prescriptive hands-on. Regulation also of the way banks are organizing themselves in pay and in governance, and that's an area where I think the industry still has a chance to show some responsiveness, and if that responses to this is not there, we're gonna see a lot more regulation in that area. This is a very important point that you're making. You're basically saying if the banks don't respond, the banks will have it done for them is what you're suggesting. I wanna just point out that we are gonna continue this panel, and if you wanna follow us, go to CNBC.com because we are continuing the panel in the room and we will get the audience members involved, but as far as CNBC television is concerned, we're gonna continue our regular programming and I'm gonna send it back to my colleagues in London back to you and do follow the panel on CNBC.com. Paul, you wanted to jump in. One of the reasons and the answers to the question why is it taken so long is in the realm of, and it's part of the answer is the realm of politics. In the United States, for example, Dodd-Frank was passed before the congressional panel issued its findings, which it was required to do, about the causes of the 2008 financial crisis. So they passed this thing without active and aggressive collaboration with other G20 governments and it contains, in my view, a lot of mischief, two things briefly worth mentioning. One is the so-called Volcker Rule. We've been talking on this panel about the separation of deposit of classical banking, the kind of thing for which deposit insurance is appropriate, versus trading. But proprietary trading, as defined by the Volcker Rule, is a metaphysical exercise. And although some proprietary traders have been fired, desks have been shut down, it's a mystery with tremendous amount of regulatory discretion and authority. A second is the so-called orderly liquidation authority, for a variety of reasons that are too granular to discuss in this panel. We think we'll turn into an accelerant of the next crisis rather than some well-thought-through or clever response to the 2008 crisis. So the lack of solid analysis and collaboration, in my view, is part of the answer to why five years later is the system looking the way it is, not that changed from how it stood in 2008. Are you able to define the Volcker Rule and differentiate proprietary trading from acting on behalf of the customer? Well, I think that the concept of what to do about trading activities versus lending activities is worthy of discussion. Some people have said, bring back Glass-Steagall, that's suggestive of a direction, worthy of discussion. Glass-Steagall did not address really derivatives positions, but it ought to be something that's analyzed and discussed because it's important. Hedge funds have, we put up deposits. Banks, when they trade with each other, do not. When they trade with the exchanges, with exchanges, you put up deposits. Fully collateralized. Excuse me? Fully collateralized with each other. Without initial margin deposits. Fully collateralized, every day with every major counterparty. Well then, we're a minor counterparty. With our other banks, you said. Banks with banks, fully collateralized with each other. Kai just mentioned, there are many ways to set up a financial system that works. You can have a debate about ring fencing and Glass-Steagall. Glass-Steagall wasn't the problem. Remember, if you look at what happened, Fannie Mae, Freddie Mac, MonoLines, AIG, insurance company, mortgage brokers, Bear Stearns and Lehman, MonoLine companies, MonoLine insurance companies, that was the first wave of failure. And I see Gail Kelley, if you look at Australia, Canada, Japan, they never had something like Glass-Steagall, nor did they have problems with this crisis. And they're bigger, much bigger. So there are other reasons you can set things up to work. Doesn't that mean just more? Sorry, but AIG didn't fail because it's an insurance company. It failed because it was conducting non-regulated banking activity in an insurance company. If I can just give, maybe for the audience, a concrete example of the frustrations we have. Basel III, at a high level, wants banks to have more capital. Do you know who owns the bank? It's us. The largest investor in banks is the insurance sector. Okay, in the UK, we own 15% of the banks. That's the number one holder of bank capital. Solvency II, which is our own Solvency regime, says that we cannot invest in banks. And I've made the point here to many regulators. So how does that work? Who's gonna provide the capital to the banks? If the banks are not investable, we are the first investors in banks. Solvency II is saying that we can actually, by the way, we can only invest in triple A, sovereigns of which there are fewer, less and less. It's kind of dwindling the supply. What do we do? So all I'm illustrating with that is the lack of joined up thinking. And this is really an important point. Instead of arguing about the detail, it's about the forest and the tree. What are we trying to achieve? So a lot of debate. Does anybody on the panel believe that there won't be a financial crisis ever again? Can I do a show of hands? Okay, so we'll have financial crisis. That's a starting point. So there's a lot of effort and energy going into are we gonna make it safer? We don't want financial crisis anymore. You say that you don't want capitalism. You don't want market. There will be financial crisis. So let's start by agreeing on the important things. Then the question becomes, how do we minimize their impact? And let's discuss that. And we're all interested in discussing that. But right now we see an environment where the debate is very confused. Things are going in all directions. There are people who are busy trying to make the world safe forever so that there's never a financial crisis again or they're wasting their time. There will be another crisis. To be fair though, that's what we are discussing. How to minimize. Yes, exactly. But there is a lot, when you look at regulators, there's a lot of discourse along those lines. So I'm just asking for a kind of more adult debate at a higher level. Things like the inconsistencies between Basel Free and Solvency to our major issue. Who's going to provide the capital to the banks? That's not really discussed here. Right, Min. Yeah, I would like to add also one dimension into the debate and what I've been talking about in what happened in the past five years and the Financial Institute says they have done a lot, I agree. Regulators say they have done a lot, I also agree. But overall, I would say it's still a long way to go. But it looked like still a lot of issues on the table unsolved. You listen to the debate and people have different views. But that's okay, that's normal, right? But I will say, at least the particular moments and things are much better this year than 12 months ago. A year ago we're here. We're really concerned about possible euro collapse, you know, U.S. fiscal cliff, China hot landing. And market, the liquidity risk, sewing and credit risk is really concerned. So with all the policy actions this year, this time it's much calmed down now. I think that's the way. But we've got to be very careful. So you think Europe is not a problem anymore? I think the tail risk has been moved off the table but issues still there. For example, the funding pressures. If you're looking for a grace, I just give you the grace, Portugal, Ireland plus Italy and Spain, the whole year funding is roughly 2.3 trillion. And among them, three years ago, the funding 80% from private sector, today 60% from public sector. So you will see the funding pressure. So there's still a long way for Europe to go. But what I'm trying to say is, if you're looking for today's people, you know, fixes the lowest in the past five years, people feel a little easier, I mean, many people in this room. But new challenges are emerging now. For example, death overhand. It's a really serious issue. It has a long-term impact and actively under financial stability. We saw the market starting pricing in those death issues. For example, low interest risk environments. How long? Insurance companies are really in a very challenging situation. And we observed the market start to pick it up the more risk, risk appetite increase, even in the money manager fund market on the risk-provoking increase quite a bit in the past two months. And investors tend to take more risk with these low interest environments as well. So looking forward for this year, I would say, yes, we have issues there. We haven't solved this yet. But we saw it's a new challenge to emerge. So we've still got to be very careful. What about that, Axel? When does this low-rate environment become a real issue? Or is it already? I mean, coming from the Buddhist bank, what's your view on what the Fed and Mario Draghi have been doing? Well, look, I mean, I voiced that view when I was in my previous position and I haven't changed my view too much. So basically, we are in an environment where I'm very concerned that when we talk about central banks, there is a very clear perception that they're the only game in town by now. Taxpayers' budgets are stretched, deficits and debt are at their limits. And so the central banks are portrayed as the only game in town. Look, there is some absolute need for expectation management here. Central banks can do certain things. They can build bridges. They can provide liquidity. They cannot solve solvency issues. The deeper issues are still there in Europe as well as in the United States. Central banks can buy time to allow an orderly deleveraging process, but they cannot fix issues long-term. For me, all of the debates are taking some absurd dimensions in a way. Look at the US fiscal cliff and debt ceiling debate. From a European or Swiss perspective, a debt ceiling is something that stops you going in debt when you reach the limit. In the US, rather than excessive debt and too high deficits, the problem seems to have been identified as the inability of policymakers to remove the fiscal limits as soon as they start to become binding, where in Europe the debate is more, debt is too high, we need to find a mechanism so we bring debt and deficits down, and a debt ceiling is a good place because it starts exercising discipline on policymakers. So I think we're heading into a very dangerous environment where we've been over-leveraged, we've been overextended in the balance sheets of the private sector, of the banks, and of the sovereign debt sector. We are trying to solve this by moving into more leverage and using sort of the problem as the medicine going forward. This is just buying time. We are living now at the expense of future generations. We are actually, our job should be to endow future generations with the ability to live a better life. What we're doing now, we're living a better life at the expense of future generation. That's not a long-term, sustainable solution. And I'm not in favor, never have been, and as a former Bundesbanker, have that in my own perception, I'm not in favor of short-term fixes that come at the risk of increasing the problems down the road to a much higher level. And that's exactly what we're doing. We're trying to keep a speed limit for our economies that simply is unsustainable going forward against the structural challenges and against the aging environment that we have. And the growth in the future will come from emerging markets who want to have a share in the global economy. They are not in favor, and we heard that, of a global regulation that inhabitates them to become larger and to take part in the global economy. The established world is doing something and the central banks and governments are adding to it of trying to solve a problem by pushing it down the road and making it ever bigger. It's not gonna work, and at some point, push comes to shove. There will be a resolution, and the resolution, in my view, it better be orderly because if it's not, by increasing the size of the problem, we might have bigger problems down the road. And that, in my view, is too little taken into account when we praise the ability of central banks to just buy another quarter of, you know, more of better growth rather than really allowing the economy to do the necessary adjustment in an over-leveraged environment. Orderly leveraging should be the job, not trying to continue leverage being excessive. That's the problem. So you think rates then should be at normalized levels at market rates, and you don't think that they should be manufactured by central banks, and you don't think we should raise the debt ceiling? I think central banks' policy, let me make a difference. Central banks' policy in easing and doing the right things was absolutely adequate and needed in 2007, 2008, 2009, and into 2010 to fix the problem. To keep that stance loose into 2015 and then to only tighten gradually, which will happen, is producing an externality going forward. So, no, it was absolutely right what central banks did in direct reaction to the crisis. But going forward, they have to answer the bigger question of how they will orderly exit from where they're now to a more sustainable environment. And I haven't seen that answer credibly because all I hear is we'll keep the currently loose debts. Paul. I agree with Axel that in the throes of the crisis, the central bank bond buying was appropriate. Shortly thereafter, it might still have been appropriate. But even then, it had potentially a cost which was not visible. And as it's grown to where today, there's probably around $10 trillion of bonds on the balance sheets of several major central banks. Today, the price of long-term debt in the United States, Japan, England, and Europe is severely distorted by this policy and policymakers have been lulled into a feeling and a belief that this policy of QE, quantitative easing in its various forms, is costless. It's costless because inflation is not roaring and central bankers say it's not money printing. But what it's doing is distorting the prices of long-term debt and possibly equities and everything that's related to the capital market line. And also giving policymakers an excuse not to pursue sound policies of growth-oriented policies which can lift some of these economies out of their problems. Jamie, and then Andre, I'd love you to break in and then we're gonna get just a few questions from the audience before we wrap it up. I think the way we should think about it, I agree with all the things about monetary policy. I think they saved the system. It was global, so it wasn't just the United States. Think of monetary policy, policy, and fiscal policy. What the central banks need now is good policy and good fiscal policy. And so it's really incumbent upon the governments to do good fiscal policy and good policy to give you the positive side, just a little optimistic. If you look at the United States today and you're still 25% of global GDP, it's in pretty good shape. Okay, corporate America, middle market America, small business, consumers, housing is turned. The table is really well set. And I think the world needs the United States to start to grow because the most important thing now is good, sustainable, growth, and jobs will make the central bank job easier. Europe is stabilized, though I would put in the counter it's gonna have its ups and downs down the road because it's a very complex situation. The American situation is we know what to do, we just gotta find the will. The European situation is they have the will and there's no alternative to the Euro, it's really complicated. They're gonna have to figure it out and I think they've done a lot of things to stop it from getting worse. I think if we do all the things right we could get out of this. If we don't, you may very well see, this will go on for the 10 years and then we don't, QE3 is one of the greatest kind of monetary experiments at all time. They'll be writing books about this for 1,000 years. I hope the books say the invention of QE3 is one of the great things that ever happened. Andre? Well, we conclude this with what I've started. The problem is not with the banks, with the governments and regulators, I think. I didn't say that. All right, let's get some audience questions real quick. Yes, sir, right there. Yeah, I think you refer to it and then I'll come to you next time, right? Daniel Sacks, Preventus. I am a shadow banker. What we do is we lend institutional money to mid-sized companies in Europe that are finding it increasingly difficult to get funding. We fund growth. We're unlevered. We have no systematic risks. We help create returns that meet pension commitments. Of course, there are shadow banks that do pose systemic risk, but I think non-bank lending, we will need a much more developed non-bank lending market in a bank system that needs to deliver. And it could be much more a part of the solution rather than part of the problem. Would you agree? Firstly, and secondly, what is the right type of regulation for not throwing out the baby with that bathwater, so to speak? It's a free market. You're entitled to build a business and I agree. There's a lot of needs out there and people should find ways to fill it. As long as you're not a systemic rescue, you should be allowed to do what you want. You will have to compete with us one day too, though. That's not so easy. And I think the other issue is don't start a deposit taken institution as part of your conglomerate because then your regulation will be different. And the other one is as soon as you hit retail space with any of your debt instruments or funding, then there'll be a lot more regulation. So, you know, quite clearly, as long as you can fund institutionally and as long as your investments are capital market investments, that's fine. I don't think you'll see a lot more regulation in any of the entities. It's more the retail space and the deposit space that will be protected in the future. Even you are a good share of bankers. I'll get some not-good share of bankers in the system as well, so you probably will agree with me. So, from your position, I'll probably say you will welcome a proper regulatory framework because over on the share of bank sector, right? Yeah, you agree. We have about five more minutes. Let's get a few more questions here and then here. Brad, sir. David, sir, from Algebra's Investments. A question for the regulators. Why have regulators advocated their own responsibility to rating agency so that basically anything the regulators do, that's why nobody ever gets fired. It's, well, the rating agency at rating X, Y, epsilon. Why don't they take that responsibility given all the people they hire and maybe they should hire more people? The second question is on derivatives. Corporation, you know, GDP, it's one-year profit. If I think about my mortgage is 20 years, my life insurance is 20 years, I should be able to hedge interest rate risk, you know, currency risk. So, I see nothing wrong in having derivatives being five times my yearly profit. My insurance and my mortgage is 20 years. So, can you explain me why you're so concerned about the people are trying to reduce and minimize risk using derivatives, interest rate and exchange risk? I don't see my mother be able to take a view on euro-dollar or interest rates 10 years forward. So, I see nothing wrong in banks engaging in this activity. You want to check that, Min? Yeah. The first issue is on the regulatory framework issues. As I mentioned, the rating and other, it's a whole part of the regulatory framework. It's not only capital issue, it's not only the credit ratio, it's the whole thing. And there's a lot of debating as over-regulation or under-regulation. I mean, given the experience before crisis, given the experience we have today, you hear very different views from the panelists than now so far. But I would say over from the system per se, the regulatory reform has been making progress, but they're very slow, very slow. And consistency, implementation, and it's a huge issue. And the standard as Exo mentions, the global standard is also huge issues. There's a lot of room to move forward. At least a particular point, I would concern that the divergence between the private sector and the public sector is quite big. So I would say it is important for government, for the private sector, for the regulator to work together. As Jamie echoed, the cooperation is absolutely important. The same as the derivatives, Jamie made a very good point. It's a good derivatives, you know, this serves the clients, the hedge risk or everything, as you mentioned, you need those things. But there are a lot of derivatives to derivatives. The derivatives of squares and other things we observed before 2007, which really messed up the market. So we've got to be very careful. In that sense, a certain framework, I think this is very important and good for the whole market and for the people like you. Something needs to be understood about hedging, which is understood by practitioners. A hedge is a separate position. And it needs to be, and usually is, separately collateralized by mark to market. In the absence of mark to market, large to very large to crippling, unsecured credits and debits can grow in the system. So for example, if somebody, you've described an interest rate hedge, but if somebody is long a mine of some kind and sells a strip of assets, this strip of assets, if the price of the underlying goes up, may be actually unrelated, certainly in time, but actually in production possibly to the price movements and the value of the hedge. And so hedging is useful, as people have said on the panel, but it's not a panacea and it's not riskless itself. We only have time for one or two more questions. Yes, sir. You know, if you've had a topic like the future of financial services in the forum of young global leaders here, the discussion would have been about the future. One of the threads of discussion there was after print media and digital music, this industry is ripe for disruption, particularly through the venture industry. Are you worried? Ripe for destruction? Is that what you said? Disruption by new entrants. And so as captains of established businesses, are you worried? A pessimist is an optimist with experience. I'm not worried. You want innovation. You want disruption. That's a healthy thing. So, you know, we expect that and it's happening all the time in payment systems and products and lending and that's a good thing. And actually, you know, you will see that not everybody will try and look the same. You'll see diversity. You'll see people focus on what they can do best. We at UBS decided to focus on our wealth management global franchise, which we put much more at the core and other banks will put different things at the core because they haven't got such a global outreach in wealth management. You will see diversity and that helps. You will see new entrants that challenge established players and it helps. Competition always helps to keep everyone on top of issues. But I think the one issue that I'm concerned about the financial industry as we're dealing with short-term fixes is we're losing again in the same way that Germans like the thing, we're losing track of long-term. Now, one of the, in my view, big unintended consequences of the new regulation is fixes a lot of short-term issues, but the biggest challenge at the moment is who will really be the long-term investors that fund long-term investment projects that are there to facilitate growth. We heard from the insurance industry that are not available anymore for these long-term funding issues. The banks are getting out of it because it's over-proportionalized in the capital standards. So who will really, and even infrastructure financing, is, has capital weights that make it a very unattractive business given the cost of capital. So who will fund investments in infrastructure and long-term growth in emerging markets if it's not gonna be the banks, if it's not gonna be the insurance and pension industry, if it's not gonna be the hedge fund industry, who's gonna do it? That's the one issue we need to fix. The short-term fixes are right, we need to do it, but think about the unintended consequences this has for long-term oriented investment. And that's very important for the future generations. On that note, we will have to wrap it because they need the room. This has been an incredibly valuable discussion, gentlemen. Thank you for your time. And thank you, ladies and gentlemen. Thank you. Thank you. Thank you.