|Mohamed El-Erian – Chief Economic Adviser – Allianz
How Healthy is the Global Financial System?
Summary: El-Erian sees three major risks in the global financial system. First, as banks have ceased certain activities due to regulations, non-banks have stepped in to perform the same activities without similar oversight. Second, segments of the market are in a “liquidity delusion”, in which some exchange traded products may be over-promising the liquidity they can provide. Third, technological disruptions in big data, artificial intelligence, and fintech have not been tested by a full market cycle. The financial system could experience detrimental impacts from these new technologies in an economic downturn.