IMF says fixing banking too slow

Written By Unknown on Rabu, 23 Januari 2013 | 19.15

23 January 2013 Last updated at 06:04 ET

The financial industry still has a long way to go to fix itself, the International Monetary Fund's (IMF's) deputy director general has said.

Financial products remain complex and shadow banking continues to be unregulated, Min Zhu told bankers at the World Economic Forum.

He urged bankers and regulators to cooperate more closely.

But JP Morgan chief executive Jamie Dimon hit back, arguing that better - not more - regulation was needed.

The International Monetary Fund's Min Zhu said: "In the past five years we tried to solve so many things, but there still are a lot of things on the table."

'Progress is uneven'

"With all the debates going on, the financial market structure didn't change very much. We're not safer yet," Mr Zhu told a panel including Mr Dimon, UBS chairman Axel Weber, and Prudential chief executive Tidjane Thiam.

Andrey Kostin, the head of Russia's VTB bank and Paul Singer, who runs Elliott Management, the $21.5bn (£13.5bn) hedge fund, were also present.

While some banks are continuing to deleverage - winding down their debt piles - after the 2008 crisis, more importantly, the entire banking industry still makes up more than half of the world's annual economic output, said Mr Zhu.

Regulators and bankers are not cooperating enough either, he said.

"The debate between needing more regulating or over-regulating is important, but what is more important is that we need financial institutions working with regulators to solving them. Progress is really uneven."

'Getting it right'

But JP Morgan chief executive Jamie Dimon defended bankers, and argued that regulators, whom he described as being "overwhelmed" with the complexity and the magnitude of their task, were "trying to do too much, too fast."

"You want good, strong regulation. You don't want taxpayers to pay... big banks should go bankrupt in ways that won't damage economies. There are right and wrong answers. We should get it right," he said.

"[The debate] is not like more or less [regulation]. Unless we solve this binary question we won't get anything solved."

"Finance is a critical part of how the economy functions," he said. "If you're in a barter economy, there are no financial assets. Once a society starts to save, there are financial assets, and you want there to be financial assets," he added.

"I wish the world would sit down get their people together… we have so many things coming, it's not going to fix, it's just five more years pointing fingers, scapegoating, using misinformation, and thinking we're making a better system."

Mr Weber, the UBS chairman former


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