By David Stallibrass

There are gaps in our understanding; we are addressing them with the support of the wider research community. We need data and evidence to inform how we can support economic growth.

The Financial Conduct Authority (FCA) has always been about supporting economic growth. Trusted liquid markets support growth. Reducing financial crime supports growth. Accessible products for consumers supports growth. Competition supports growth.

Last year, to emphasise its importance, parliament set the FCA a new secondary objective to support growth and competitiveness over the medium to long term. The need for institutions across the UK to come together to support a growth agenda has only increased since then.

However, there is no universal agreement on exactly how financial services regulation might best support growth.

Should we increase consumer protections so that consumers have the confidence to use the services they need to support engagement in the economy? Or should we focus on reducing the regulatory burden on industry? Can we do both? What is the right balance of risk between consumers and firms?

Should we strengthen our oversight of wholesale markets to ensure world-class market integrity and compliance with international norms? Or should we differentiate, innovate, try something new and different, riskier – perhaps cheaper?

Or should we focus on encouraging efficient allocation of capital across the economy, incentivising investment in productive assets and disincentivising the speculative?

And how much of a role can financial services regulation play by itself? What about other system players, such as domestic and international government authorities, and contextual factors, such as demographic shifts and climate change?

Our literature review identifies areas for future research

In a literature review, we attempt to cover what is known about the connections between financial services regulation and economic growth. This isn’t an FCA view. But a summary: a mile wide and an inch deep. We’ve sought to identify where research exists, and then ask the questions that we at the FCA would, if we had a magic wand, wish we had found answered.

However, we hope the scope of the questions we’re engaging with signals the breadth of ambition we have for doing our part in unlocking growth. We hope the framing of those questions helps communicate how we’re thinking about growth and competitiveness. And we hope our suggestions for next steps contribute towards the rich policy and academic debate in a way that, ultimately, will help guide our actions and support some of the difficult decisions we may have to make.

We invite collaboration and input from the wider research community

We have conducted our own research on links between capital markets and growth, and our own reviews (PDF) of how we are meeting our secondary objective to support growth and competitiveness. We have a future looking research programme that, in co-operation with researchers and other public bodies, will try and answer some of the missing questions highlighted in the review.

We’re also announcing that we will be holding a multi-disciplinary competition later in the year for academics, think-tanks, and research institutions to bid for funds to help move the literature towards practical, actionable recommendations.

We welcome suggestions for research we’ve missed or misinterpreted, and other questions that we should be asking. If you do have any comments, please contact growtheconomics@fca.org.uk.

Helping our financial services sector support growth is a large and complex challenge. We must face up to it with transparency and co-operation.

  • David Stallibrass, Duty Chief Economist and head of department, economics.



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