Policy makers should step up their efforts to bolster public trust in finance to reduce the risks of contagion if economic growth and financial returns continue to fall, according to a new OECD report.
The 2008 global financial crisis marked a turning point in the way governments considered the role and importance of trust in policymaking. The policy responses to the crisis – unprecedented in their scope and cost – had one underlying goal: to restore trust in the financial sector and the wider business community.
Governments were largely successful in fending off a full-scale global depression, but more than a decade on, business has still not fully recovered the trust lost in the crisis. Today, a series of important social, financial and economic trends have placed trust in business and finance once again at the front of mind for political and business leaders alike.
Strengthened public trust in business and finance is essential to encourage the productive investment and commerce that contribute to inclusive and sustainable economic growth.
The OECD Business and Financial Outlook 2019 explores potential risks that could erode trust in the financial sector in the future. These include the abundant issuance of sovereign, corporate and bank debt, which has supported post-crisis growth but has raised concern over potential risks of excessive debt as the credit cycle matures.
The Outlook provides policy makers with concrete considerations for action in five areas: financial markets; financial institutions-such as banks and pension funds; company liability-that is, trust in companies to obey the law; the level playing field, focusing on the rising importance of state-owned enterprises and their associated conduct risks; and online markets.
The OECD Business and Finance Outlook 2019 is available at https://www.oecd.org/finance/oecd-business-and-finance-outlook-26172577.htm.
The Outlook is the first outcome of the OECD’s Trust in Business initiative which will further develop the link between trust and business performance and provide a platform for cooperation between governments, business and civil society.