New Financial Architecture

Taxpayers will benefit most if governments put shareholder responsibility ahead of political considerations when it comes to managing their equity stakes in financial institutions. With over US$ 700 billion of taxpayers' money invested, the wrong choices – in policy objectives, management strategy, or emphasis in execution – could cost taxpayers billions of dollars and have long-term implications for the stability of the global financial architecture.The challenges facing governments managing and resolving these newly acquired equity interests in financial institutions are explored in a new working paper from the World Economic Forum in collaboration with over 150 leaders in public policy, academia, and business collaborated as part of a year-long study. Their discussions raised six key suggestions for governments:
1. Address equity stakes separately from other types of crisis intervention
2. Aim for a rapid exit whilst protecting investment value
3. Establish an independent process to manage ownership stakes
4. Restrict government influence on owned institutions to board-level issues
5. Be realistic about securing and incentivizing the best available talent
6. Raise transparency beyond public disclosure of financial performance