G-20Y Session. April 12, a.m. Room I 2-210, the World Bank I Building (1850 I Street N.W.)

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1 G-20Y Session April 12, a.m. Room I 2-210, the World Bank I Building (1850 I Street N.W.)

2 G-20Y Session Panellists Ksenia Khoruzhnikova, Founder and President, G-20Y Association Ann Kaplan, CEO, ifinance Canada Inc. Barbara Kreissler, Advisory Board Member, G-20Y Association; Head Business Partnerships Group, United Nations Industrial Development Organization (UNIDO) Kazuki Kitaoka, Chief OiC, Strategic Planning and Coordination, United Nations Industrial Development Organization (UNIDO)

3 G-20Y Session objectives -Presentation of the G-20Y Association Mission and G-20Y Summit concept -Overview of the G-20Y Summit 2014 agenda - Interaction between G-20Y Association and UNIDO - The current negotiations of the Post 2015 Development Agenda and engagement opportunities of the private sector - The link between the Global Development Policy Framework and the G20Y Agenda for 2014

4 Who are we? G-20Y Association G-20Y Summit International Organizing Committee Association is a Swissbased organization with its Headquarters in Geneva. G-20Y Association gathers c-level representatives from national and international leading companies (aged from 30 to 50), the so-called G-20Y Generation

5 Who are we? The G-20Y Generation* The G-20Y Generation is independent from national and political interests and prides itself on sharing a common G-20Y Vision: achieving greater international cooperation, sharing innovative ideas and putting mid- and long-term economic prosperity on today s international agenda. The G-20Y Generation of young and successful business and financial leaders is the first generation for which the participation of 20 countries in a global economic processes is normal. The G-20Y Generation wishes to concentrate its efforts on producing, in the twenty-first century, an unprecedented period of sustainable worldwide economic growth. Mid- and long- term prosperity is the mandate of the G-20Y Generation. It is our responsibility to put it on today s international agenda. *The Concept of the G-20Y Generation has nothing in common with Generation Y Concept

6 What do we stand for? The G-20Y Association Vision 1.Achieving greater international cooperation 2.Sharing our innovative ideas 3.Putting long-term economic prosperity on today s international agenda

7 How are we organized? The G-20Y Association Structure The functions of the G-20Y Association are carried out by separate dedicated entities: The Founder and President of the G-20Y Association provides the overall impetus for the organization and coordinates the work of the IOC in all of the G-20 countries. The President has authority to sign all G-20Y Association official documents. The Business Assembly of the G-20Y Association is an advisory body to the President. It comprises successful young business and financial leaders representing various G-20 countries. It assists the President in the organization of the G-20Y Association activities and in the promotion of its initiatives and values among businessmen and women, governments, press in the respective countries of its members. Business Assembly members are in charge of speaking about G-20Y Association at different events, other economic forums, business leaders meetings. The Executive Committee gathers together successful young business and financial leaders representing various G-20 countries, the most active G-20Y Association members for the organization of the G-20Y Summit every year. The Executive Committee members actively contributes to the organization, administration and promotion of the annual G-20Y Summit. The Head of the Executive Committee is a full time employee, who coordinates the daily work of the G-20Y Association s staff. The Advisory Board provides strategic advice and actively participates in the creation of the agenda for each G-20Y Summit.

8 What do we do? The G-20Y Summits and Recommendations 1.The G-20Y Summit: turning the G-20Y Vision into Recommendations 2.The G-20Y Summit: exchanging best business practices and creating strong bonds

9 What do we do? The G-20Y Summits and Recommendations The objective of the G-20Y Summits has been the preparation of a set of recommendations by young business leaders to be disseminated across the world and shared, in particular, with the G-20 Heads of States and leading international institutions and organizations. The G-20Y Summit participants are c-level executives from national and international leading companies (aged from 30 to 50). The G-20Y Summits add value not only to the G20 leaders efforts in responding to the global economic and financial challenges, but also they serve as a unique opportunity for outstanding young business leaders and individuals in leading positions with governmental or public institutions to gather together in an exchange of ideas and best practice, encouraging stronger personal and professional relationships.

10 G-20Y Summit 2014 agenda -Focus on items already on the international agenda (e.g., G20 Heads of Government, Financial Stability Board) versus items which have not yet gained attention - Level of generality / granularity / practicality should the G-20Y recommendations provide

11 G-20Y Summit 2014 agenda I. Energy Markets Committee II. Food Security Committee III. The City of Tomorrow Committee IV. Global Demographic Developments Committee V. Global Financial Reforms Banking Committee VI. Global Financial Reforms Insurance Committee VII. Global Financial Reforms Alternative Investments Committee VIII. Private Infrastructure Investment Committee IX. Global Trade Obstacles Committee X. Creating Jobs Committee

12 Interaction between G-20Y Association and UNIDO - UNIDO representative is Member of the Advisory Board of the G-20Y Association - G-20Y Association could add value by providing an independent perspective or fresh look into issues and areas of concern on the international agenda

13 G-20Y Association Contacts 14 rue du Rhône CP Genève 11, Suisse

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15 Shadow Banking: The system of credit intermediation that involves entities and activities outside the regular banking system ¹. Examples of shadow banks include: finance companies, asset-backed commercial paper (ABCP) conduits, limited-purpose finance companies, structured investment vehicles, credit hedge funds, money market mutual funds, securities lenders, and government-sponsored enterprises². ¹Shadow Banking: Strengthening Oversight and Regulation; Recommendations of the Financial Stability Board, October, 2011; ²Shadow Banking, Zoltan Pozsar, Tobias Adrian, Adam Ashcraft, and Hayley Boesky Federal Reserve Bank of New York Staff Reports, no. 458 July 2010 Recommendations re: Shadow Banking

16 PARIS 2011 Shadow Banking CHAIR: Professor Holger Erchinger, Partner KPMG LLP New York, G-20Y Summit Advisory Board Member; USA Ignor Simic, Daadois Villet Maillot Brochier (AARP), Partner; France Ikuo Nakamura, ORIX Corporation, Vice President, International Business Group, Global Business and Alternative Investment Headquarters; Japan Jacques Celliers, RistRand Bank, Chief Executive Officer of FNB Credit Card, FNB Retail Foreign Exchange and FNB Vehicle Finance Divisions; South Africa Joon-Hui Yoon, Hana Financial Group in South Korea, Manager, Risk Management Team; South Korea John Flint, HSBC, Global Asset Management, CEO; UK Yousock Hong, Hana Bank, Manager, FX Dealer, CFA;South Korea Ann Kaplan, ifinance Canada, President & CEO; Canada C Level: Integrative think-tank shared ideas

17 The shadow banking system is an important sector of a developed financial system, facilitating capital formation and economic growth. Generally, the entities of the shadow banking system have raised short-term financial instruments to finance longterm, illiquid and risky assets through multiple steps of credit intermediation Disruptions in the credit markets have made them subject to rapid deleveraging, selling their long-term assets at depressed prices. Non depository: Not subject to the same safety/soundness as depository banks Borrower (form investors) short-term, loan long-term Subject to market risk and liquidity risk (no access to central bank liquidity/ quarantees)¹ Short Term Long Term ¹2011 KPMG LLP

18 While the financial crisis originated in 2007 in the US as a subprime crisis, it evolved into a banking, sovereign debt, and ultimately political crisis of global scale. The recent economic crisis can, at least partially, be linked to the vulnerability of the shadow banking industry. Figure 1. Traditional and Shadow Banking Systems ¹Federal Reserve Flow of Funds Report

19 Financial Stability Board Publishes Progress Report for its Shadow Banking Task Force On September 1, the Financial Stability Board ( FSB ) published a progress report on the work of its Shadow Banking Task Force (the Task Force ) to develop a stronger oversight and regulatory framework applicable to the shadow banking system. Earlier in the year, the FSB published a Background Note on Scoping the Issues for shadow banking. It identified four broad options for developing a regulatory response to shadow banking entities and activities. In general, these options included: Regulating the interaction of banking entities with shadow banking entities. Directly regulating shadow banking entities. Regulating certain instruments, markets or activities to facilitate sound credit intermediation. Implementing macropudential measures to regulate the shadow ¹The Washington Report Newsletter September 6, 2011 banking system more broadly

20 We, the G-20Y Summit participants, support the notion that: The shadow banking system is an important part of the global economy as long as the benefits are derived from specialization and competitive advantage (and not from regulatory arbitrage); The financial system can only be effective if there is clarity as to where risk in the system resides; Once clarity has been achieved, it should be determined whether the capital that ultimately supports credit creation is appropriately sourced; Following on from the above, there is no need for regulation as long as the underwriters and participants in those markets are the only bearers of that risk (no backstop by the tax payer); Regulation should be required only in instances where the risk and ultimate liability may be transferred to the tax payer. Recommendations from the G-20Y Summit Paris, 2011

21 In regard to the regulation of shadow banks, we have agreed on the following four recommendations: Implement a policy of no governmental bailouts for activities outside the regulated area. This means that underwriters have to understand that they bear the full risk and must therefore identify and communicate those risks in the various unregulated financial markets; Base regulatory activities in the area where the tax payer is at risk on functions rather than institutions; Accelerate and implement reforms, in particular related to money market funds. Specifically, clarify that the risk resides with investors, consider a substantive change regarding the concept of net asset value (NAV), and the introduction of a liquidity redemption fee designed to remove the incentive to be the first out of the fund; Establish a voluntary compliance framework that would facilitate transparency and foster the system in regard to the unregulated shadow banking system. Recommendations from the G-20Y Summit Paris, 2011

22 Global Financial Reforms Banking Committee 2014 In the aftermath of the global financial crisis, G20 member States have made considerable headway in global financial reforms aimed at preventing a repeat of the financial crisis but the work appears to be unfinished. The G20Y Global Financial Reforms Banking Committee will discuss: Priorities to complete banking-related financial reforms; How to prevent and manage the failure of globally important banks; Approaches to make derivatives markets safer.