Chief executives, chairmen and senior executives of some of the largest banks in Europe and the US have warned of the potential for unforeseen risks caused by policy makers attempting to avoid future financial crises.
Douglas Flint, group chairman of HSBC, UBS chairman Axel Weber, Deutsche Bank's co-chief executive Anshu Jain, Larry Fink, chief executive and chairman of BlackRock, and Swiss Re chief executive Michel Liès are among a number of big-name leaders to have put their names to a report, which conditionally backs the use of macroprudential policies to maintain the “right balance between financial stability and economic growth”.
But the document, developed and published by the World Economic Forum, goes on to warn of “the limits of our current knowledge of the impact” of such policies, which are used to ward off bubbles in markets such as property and equities".
The group of 15 execs has argued that more research is required to ensure the tools are effective and "do not generate additional risks".
Within the seven-page report, Swiss Re's Liès is quoted as warning that "macroprudential policies could support financial market stability and thus long-term investors’ ability to provide risk capital to the real economy".
"Applying a one-size-fits-all approach, however, should be avoided and unintended consequences monitored."
The document concludes that while significant progress has been made within the use of these tools, "macroprudential policies are still at an early stage and more should be done".
It continues: "Many countries have included financial stability as part of their policy-makers’ mandate, have created bodies responsible for financial stability and have given those bodies tools to address systemic risks. However, it is important that more research and prudent experimentation be conducted in order to better identify risks, to ensure that the tools used are effective and that they do not generate other risks.
"The World Economic Forum and the members of the Role of Financial Services in Society initiative are ready to continue working together with the public sector, academia and civil society to make the financial system safer and economic growth more sustainable."