Lloyd’s Chairman Warns on Peril of Over-Regulation; Urges Growth

October 1, 2010

Lloyd’s Chairman, Lord Peter Levene warned a receptive audience at Lloyd’s City dinner that the current focus on regulation should not get in the way of strategies for future growth.

His speech was addressed to two hundred of London’s leading businessmen and women, along with senior government figures and members of the diplomatic community at Plasterers’ Hall in London. Levene suggested that “a failure of common sense” is seeing healthy sectors like insurance “still fighting a rear guard action, trying to convince regulators not to impose harsh conditions”.

As an alternative, Levene focused on the necessity to pursue growth. “I believe what Europe needs at this critical point, is not so much a safety net, but more a launch pad for the growth that will create the enterprise, and crucially the jobs which the continent so badly needs,” he stated.

Like most other people in the global financial community, Levene accepts that lessons must be learned from the 2008 crisis. “We must find rules and regulations which police effectively the international economy”, he continued, but he also believes that governments should focus on future growth, not past failures. He asked whether “much of the time that we are spending on crafting regulation and building structures to prevent a re-run of the financial crisis [could] be better spent on growth strategies?”

Along with a number of other world leaders, Levene questions whether Europe is positioning itself in the best way to meet the increasing competition from the Chinese economy, now the second largest in the world. “The question is no longer if China will become the world’s largest economy,” he noted; “it is a simple question of when, and we need to make sure that we are ready for this.”

Christian Noyer, Governor of the National Bank of France and a leading commentator on the International Economy, was the guest of honor at the dinner. He spoke about the prospects of stability in 2011. France takes over the Presidency of the G20 next year, and Noyer focused on the challenges of finding effective international structures for a globalized world.

“International capital flows have made countries increasingly interconnected and interdependent,” he explained. “Set against this, economies across the world continued to be highly diverse.” The question posed by these two characteristics “is whether this architecture will be conducive to the efficient and stable allocation of capital over the long run; or whether, on the contrary, it will lead to an accumulation of imbalances and recurrent bouts of instability.”

He also discussed some possible scenarios for how international financial flows might develop before concluding: “No one can claim to fully understand the dynamics of the new financial world we shall be facing in the coming decades. We also know that, after a crisis of this magnitude, ‘business as usual’ is not an option. The last three years have shown how much countries are mutually dependant on each other. There would be no excuse for inaction and there are, on the contrary, many opportunities for cooperating and building together a better and safer international financial system.”

Source: Lloyd’s of London

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