Day 2 at Davos - SmartBrief

Day 2 at Davos

3 min read

Modern Money

Welcome to Day 2 of SmartBrief’s roundup of financial news coming out of the World Economic Forum Annual Meeting in Davos, Switzerland. Scroll to the bottom of this post to watch a selection of Thursday’s panel discussions related to finance.

The Lady and the Gentleman: German Chancellor Angela Merkel might have been talking in Davos on Thursday, but everyone was listening to European Central Bank President Mario Draghi. Merkel’s call for Europe to stay the course on structural reforms was drowned out by Draghi announcing the ECB’s plan to inject $1.37 trillion into the Eurozone economy via quantitative easing. USA Today describes how many attendees at Merkel’s speech in Davos became distracted a view minutes in when Draghi’s news was announced.

Yea and Nay on European QE: Morgan Stanley boss James Gorman told Bloomberg News the ECB’s move on quantitative easing is a good thing. But according to CITY A.M., Larry Summers is not sure it is enough.

Speaking of central banks…: While the general consensus points toward the U.S. Federal Reserve increasing interest rates at some point in 2015, luminaries participating in a Bloomberg panel at Davos are divided. International Monetary Fund Managing Director Christine Lagarde said she expects a rate increase this year, but Goldman Sachs President Gary Cohn and former U.S. Treasury Secretary Larry Summers think the Fed might have to wait longer. “The Fed should not be fighting against inflation until it sees the whites of its eyes,” said Summers. “That is a long way off.”

European banks to get back in the M&A game?: As European banks narrow their focus to core businesses, Christian Meissner, head of global corporate and investment banking at Bank of America, says M&A activity is set to increase. “M&A is on the agenda for the first time in many years, though for non-core businesses and smaller deals as opposed to strategic discussions,” Meissner told Bloomberg.

Lazard’s Parr thinks so: The evolution of regulations has made the universal banking model a thing of the past, according to Lazard vice chairman Gary Parr. “It’s a Darwinian exercise, and what’s fascinating to me is how slowly it’s going,” Parr told Bloomberg TV. “It seems obvious with regulators increasing the capital requirements, with the burden of regulation, with the charges particularly for systemically important institutions.”

Banks’ about face on cybersecurity: Not long ago, big banks were incredibly secretive about their cybersecurity efforts. The last thing some of them wanted was meddling by government entities. Now that hacks have proven to be something even the most cutting-edge banks can avoid, the FT reports on how banks are starting to blame governments for failing to deter/prosecute hackers.


Selected World Economic Forum videos from January 22, 2015.

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Global Responsibilities in a Digital Age
Angela Merkel, Klaus Schwab


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Forum Debate: Geo-economic Competition
Pascal Lamy, Kirill Dmitriev, Li Daokui, Anabel González, Lutfey Siddiqi