FIS Digital – May 2021

The financial system after Covid-19: Reinforcing the lower for longer regime or a catalyst for change

This session examined the structural trends in the financial sector that have been either amplified or altered by the COVID crisis. It also examined whether post-COVID trends in the sector, such as the increased debt that has built up in the system, are likely to reinforce the lower for longer growth, inflation and interest rate regime or act as a catalyst for regime change. The speakers highlighted the most important waymarks for investors, including the intersection with post-crisis monetary and fiscal policy developments, offer thoughts on the likelihood of regime change and considered what that would mean for optimal capital allocation. The session also discussed the extent to which the financial sector’s resilience will be affected by physical and transition climate risk.

Click here to view Jeremy’s presentation slide


Thorsten Beck is currently Professor of Banking and Finance at The Business School (formerly Cass) in London. He is also director of the Florence School of Banking and Finance and will take up a Chair of Financial Stability at the European University Institute in September 2021. He is a research fellow of the Centre for Economic Policy Research (CEPR) and the CESifo. He was Professor of Economics from 2008 to 2014 and the founding chair of the European Banking Center from 2008 to 2013 at Tilburg University.
Previously he worked in the research department of the World Bank from 1997 to 2008 and, over the past 12 years, has worked as consultant for – among others – the European Central Bank, the Bank of England, the BIS, the IMF, the Inter-American Development Bank, the Asian Development Bank, the European Commission, and the German Development Corporation. His research, academic publications and policy work have focused on two major questions: What is the relationship between finance and economic development? What policies are needed to build a sound and effective financial system?
In addition to numerous academic publications in leading economics and finance journals, he has co-authored several policy reports on access to finance, financial systems in Africa and cross-border banking and he has research and policy experience across a large number of countries across the world. In addition to presentation at numerous academic conferences, including several keynote addresses, he is invited regularly to policy panels across Europe.
He holds a PhD from the University of Virginia and an MA from the University of Tübingen in Germany. He is also co-editor of the Journal of Banking and Finance and member of the Advisory Scientific Committee of the European Systemic Risk Board.

Jeremy Lawson has been a professional macroeconomist for 20 years and has held a range of senior positions in both the public and private sectors. He began his career at the Reserve Bank of Australia, where rose to the position of senior research economist. He then joined the OECD in Paris, where he worked extensively on European public policy and climate change issues and was the head of the Hungary/Slovenia desk. In 2010 Lawson joined the Institute of International Economics as the deputy director of global macroeconomics before moving on to BNP Paribas as a senior US economist, specialising in Fed policy, as well as fiscal issues and inflation. Lawson was the chief economist of Standard Life Investments before becoming the head of the ASI Research Institute. The Institute was founded to oversee and promote sophisticated conjunctural and scenario analysis, as well as fundamental research at the intersection of economics, politics, policy, ESG issues and markets. Lawson holds an MSc in Public Financial Policy from the London School of Economics and took a sabbatical in 2007 to advise the then Australian Opposition Leader, Kevin Rudd on economic and climate policy.


White is responsible for the content across all Conexus Financial’s institutional media and events. She is responsible for directing the bi-annual Fiduciary Investors Symposium which challenges global investors on investment best practice and aims to place the responsibilities of investors in wider societal, and political contexts, as well as promote the long-term stability of markets and sustainable retirement incomes. She is the editor of, the online news and analysis site for the world’s largest institutional investors. White has been an investment journalist for more than 20 years and has edited industry journals including Investment & Technology, Investor Weekly and MasterFunds Quarterly. She was previously editorial director of InvestorInfo and has worked as a freelance journalist for the Australian Financial Review, CFO, Asset and Asia Asset Management. She has a Bachelor of Economics from Sydney University and a Master of Arts in Journalism from the University of Technology, Sydney. She was previously a columnist for the Canadian publication, Corporate Knights, which is distributed by the Globe and Mail and The Washington Post. White is currently a fellow in the Finance Leaders Fellowship at the Aspen Institute. The two-year program consists of 22 fellows and seeks to develop the next generation of responsible, community-spirited leaders in the global finance industry.

Key takeaways

  • It is important that fiscal policy now rotates from support to long-term stimulus. Outside the US where large public investment plans are underway, there is a danger that policy mistakes of the past will be repeated.
  • Inflation will be subdued going forward, with European economies, Japan, Australia, Korea and China struggling to meet long-term inflation targets.
  • Although remote working in the services sector could push down prices, the pandemic has also pushed up pay levels amongst low skilled workers.
  • People are confident in the banking sector but while some firms can handle their debt levels, others may have to restructure, and others may not make it at all. Corporate insolvency laws vary across Europe with different levels of efficiency regarding restructuring
  • Although central banks have opened the door to changes in the payment systems, they are reluctant to cede control or decentralise finance because of concerns around financial stability.
  • Central banks are looking closely at digital assets and involved in their evolution to ward off disruption from the emergence of private digital currencies.
  • Any transition from a heavily banked system or signal of a changing dynamic will see investors re-evaluate how they value the banking sector.
  • Any transition is a complex exercise for central banks whereby they can’t halt the arrival of new technology but have to marshal its progress and ensure it doesn’t weaken financial stability.

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