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Richard Nesbitt Speaks on Fragmentation Risk at the Conference of Montreal

JUNE 17, 2015

 

GRI’s President and CEO, Richard Nesbitt, recently took part in a panel discussion alongside distinguished leaders at the International Economic Forum of the Americas.

The panel session Fragmentation Risk in Financial Services: A Retreat from Globalization?, sponsored by GRI, brought together Carolyn Wilkins, Senior Deputy Governor of the Bank of Canada, and Adrian Blundell-Wignall, Director of the Directorate for Financial and Enterprise Affairs at OECD, and was moderated by Warren Jestin, Senior Vice-President and Chief Economist, Scotiabank.

Richard Nesbitt presented his views on fragmentation in global markets, arguing that this would create value for consumers. According to Mr. Nesbitt, fragmentation would bring more suppliers to the market, providing consumers with more options. He also stated that fragmentation would introduce more electronic services which will dominate traditional business models.

From a global perspective, Mr. Nesbitt predicted that Europe would continue to be challenged and would not be the source of innovation in financial markets, while Asia would continue to grow. The US would dominate in global centres, and around the world regional markets would be led by regional players. In Canada, Mr. Nesbitt said that economic development would shift westward and Canadian institutions would deploy profits internationally out of the mature Canadian market.

Mr. Nesbitt suggested that an implication of fragmentation would be the need for more principles-based regulation.

In a future multi-polar world, Mr. Nesbitt predicted that the businesses that will thrive will be national champions who have a strong foothold in local economies. He also stated that a small number of large global firms will operate in each major market, but they would leave the local markets to regional players.

Mr. Nesbitt closed his discussion by reflecting on Canada’s outlook in the future. He argued that Canada is experienced in market fragmentation and in finding solutions to economic challenges. The country’s open access to the US market is a major strength and is vital to the success of Canadian businesses. In spite of fragmentation risk, Mr. Nesbitt emphasized his view that Canada would remain an important regional market with strong institutions.