The ongoing China-U.S. trade war, political uncertainty in the U.S., climate change, cyber risk and the slow embrace of blockchain and other new technologies in the U.S. were among the challenges facing our securities markets that were cited by experts at an SEC conference in Washington, D.C. on Wednesday.
“The United States has enjoyed an enviable position being the dominant capital market in the world,” said Gary Cohn, former director of the U.S. National Economic Council and President Donald Trump’s ex-chief economic advisor, at the State of Our Securities Markets conference. “We’ve owned that position for a long period of time,” he noted.
But he warned: “We are on the fringe of potentially losing that position, and I say that because the capital markets around the world are developing quite quickly, in a much more digitized fashion than the U.S.”
For example, he pointed out, digital payments in China are much easier, although he conceded that’s because China has a “relatively unregulated banking system” – one he stressed he doesn’t want for the U.S.
But “we have to embrace this digitization” of assets and securities that’s being seen across the global financial markets, he argued. What’s important is for U.S. regulators to “lead, not follow,” when it comes to embracing technology.
Real-time clearing in the financial services industry is needed, Cohn also said, and he and Glenn Hutchins, co-founder of private equity firm Silver Lake Partners, agreed “there’s no technological constraint” to achieving that now.
The U.S. must also embrace the move to secure smartphones, Cohn said, noting, “we’re virtually at the secure phone line right now” with the arrival of 5G next-generation wireless service. “Once we get to the secure phone, we’re going to be able to use [it] for everything we need financially,” he said.