“We are now seeing signs of the beginning of global economic recovery, as well as improvement in the functioning of financial markets, but the situation remains fragile,” said Dr. Josef Ackermann at the Institute of International Finance’s (IIF) Annual Membership Meeting, held in Istanbul, Turkey, on Saturday, 3 October.
The Chairman of the IIF Board of Directors and Chairman of the Management Board and GEC of Deutsche Bank said the IIF agreed with the Group of 20 leaders who emphasized at their Summit in Pittsburgh last week that “A sense of normalcy should not lead to complacency."

Dr. Ackermann said the industry welcomed the G20’s commitment to a more globally coordinated approach to the issue of imbalances, and to “implement global standards consistently in a way that ensures a level playing field and avoids fragmentation of markets, protectionism, and regulatory arbitrage.”

However, he warned that global regulators should be cautious about raising bank capital requirements and that banks must make sure bonus payments are “socially and politically” acceptable.

Dr. Ackermann also said that public pressures on politicians to act to stabilize domestic conditions after the large use of taxpayer funds to support financial institutions was recognized, but that some of the measures taken have had adverse international effects resulting in a developing fragmentation of the global financial system.

“We need new measures that develop a level playing field in global finance; new measures that recognize the advantages to the real economy of globally integrated institutions; indeed, measures by the official sector that strengthen the international system as a whole,” he told the meeting.

“We recognize that establishing a stable system is a shared responsibility of the public and the private sectors and that there will only be real success if far-reaching changes are made in our own operations,” he said, adding that firms across the industry are now pursuing reforms on an “unprecedented scale”.

Dr. Ackermann said that financial organizations must follow through on their responsibilities to strengthen industry standards, and that as regulatory reforms are considered, the right balance has to be found to ensure innovation is not stifled and credit growth is not so constrained that it undermines economic growth. It is also crucial, he said, “that the official and the private financial communities embark on a new phase of systematic dialogue at senior and technical levels to promote what are, after all, our shared goals of building a resilient and stable financial system that creates prosperity and wealth once again.”

In summing up, Dr. Ackermann said: “Financial services are central to the functioning of the real economy and the more we can build a strong global financial system, so the more our industry will be able contribute to economic recovery, job creation and to sustained growth.”