When would we know our financial system is working?
I am delighted that Dr Kevin Parker’s and my paper has come out, “What happens if we ‘burn all the carbon’? carbon reserves, carbon budgets, and policy options for governments“, published by the Royal Society of Chemistry in Environmental Science: Atmospheres.
This week we are delighted to announce that C4S has been launched with Roger Cohen of C2Zero – try it out to get a certificate for avoided emissions, as above.
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This article provides a bit more information and my launch text is set out below.
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Remarks to: IoD India (Institute of Directors), 2022 London Global Convention on Corporate Governance & Sustainability, The Montcalm, Marble Arch, London, W1H 7TN, 11:00-12:00, Thursday, 10 November 2022.
Boardroom Challenges In A New World Order
Emerging Challenges for Board Leadership in the New Economy
Building high performance Boards in uncertain times: Balancing Strategy, Operations & Compliance
Board’s oversight for fundamental Seismic Shifts in Global Geopolitics & guide to a disrupted world
Board’s Human Capital Strategy – Rising to the Challenges of the Future Work Place
Board Leadership and Strategy for leveraging corporate culture and value chain
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Remarks to:
The Guild of Investment Managers at Farmers’ & Fletchers’ Hall, City of London, Thursday, 17 October 2019
My fellow Alderman and your Master, Robert Hughes-Penney, kindly asked me to provide some opening remarks. I do wish I could stay longer, but as fellow Livery folk, you’ll understand that an Immediate Past Master of the World Traders needs to attend our Installation Dinner at 19:00 to become an Immediate Past Past Master or an Immediate Immediate Past Master, or some such.
The comedian Jay Leno once quipped, “According to a new UN report, the global warming outlook is much worse than originally predicted. Which is pretty bad when they originally predicted it would destroy the planet.” Sadly, that quip was from 2007.
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My dear friend Herbie Skeete heads up MondoVisione. His 2019 Forum at Haberdashers’ Hall led to some great insights on the nature of global finance. The highlight was probably an address and interview with Gina Miller, the campaigner behind two Brexit court cases.
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Institute Of Export
Keynote
Alderman Professor Michael Mainelli
23 May 2018, Mansion House
“You Never Stop Trading”
Minister, Aldermen, Fellow Masters, Ladies, and Gentlemen.
The City of London, what better place to graduate in trade and export. The Inspector of Ancient Monuments assures me that London’s archaeological evidence proves over 100,000 years of trading. Bloomberg across the road sits above two millennia of Londinium. We convene for this graduation ceremony over a millennium old stocks market. You are at one end of Cheapside, ‘cheap’ being Anglo-Saxon for ‘market’. One New Change at the other end by St Paul’s is its modern shopping mall. Gresham’s Royal Exchange opposite is over 450 years old.
The word ‘monger’ is old Saxon-German for trader or trafficker. Think, ‘drugmonger’. This trading City is therefore full of Ironmongers, Fishmongers, Lightmongers, Costermongers, Cheesemongers, and even Fearmongers. What am I as Master of the World Traders? Perhaps I should be a WorldMonger or GlobeMonger. Pssst, hey buddy, want to buy a planet?
From Adam Smith onwards, thinkers have increasingly recognised that commerce is about much more than just making money. Commerce is about exchange between people. Commerce is about social interactions where people trade ideas, opinions, or merchandise. Good commerce is a positive sum game. Trade reaps economic benefits from specialisation and comparative advantage, creates prosperity, distributes success and wealth, and collectively enriches all of our societies and communities. Trade is a force for good.
This year’s Lord Mayor, Alderman Charles Bowman, promotes the Business of Trust. His research sets out five principles for trust – five good principles for new graduates. Remember the mnemonic C-I-V-I-C:
• Competence and skills – doing what you do well;
• Integrity – being honest, straightforward, and reliable;
• Value to society – recognising and meeting wider societal needs;
• Interests of others – respecting the interests of customers, employees, and investors;
• Clear communication – being transparent, responsive, and accountable.
Trust underpins all trade and investment, firmly based on the City of London’s motto, “Meum Fidem, Meum Pactum” (“my word is my bond”). Trade should be win-win with other people. As the UK increasingly focuses on trade, remember that no-one should ‘export to’, everyone should ‘trade with’.
So CIVIC, I repeat:
• Competence
• Integrity
• Value to society
• Interests of others
• Clear communication
What I admire about you is that by starting, and finishing, your studies with the Institute of Export you exemplify all five CIVIC principles. You have studied to increase your Competence. Your Integrity in enshrined in your learning. Your Value is inherent in your increased professionalism. You couldn’t trade ethically without taking the interests of others to heart. You have worked hard on communicating your thinking and ideas. You deserve today’s awards.
The Jesuit scholar, Timothy Radcliffe, talks about universities and further education as places where we “learn to talk to strangers.” As you trade with strangers, they become colleagues, and later colleagues become friends.
But education and trade don’t stop here. All of life is learning and trade. In fact, I’ve improved a bit of Shakespeare to get that point across. Indulge me:
All the world’s exchange,
And all the men and women merely traders;
They have their wares and their merchandises,
And one man in his time plies much commerce,
His acts being short changes. [Jacques: As You Like It, Act 2, scene 7, lines 139-143]
I run a technology and finance research firm that is about 90% exports, so this year, the World Traders, young and old, Journeymen your age to ancient Liverymen like me, have focused on “Technology & Trade” as our theme. We are studying how technology transforms trade through debates, workshops, and even research into blockchains, published at the House of Commons last month as “The Economic Impact Of Smart Ledgers On World Trade”. You too will continue to learn through life, or stop living. An old quip goes, “Live as if you were to die tomorrow. Learn as if you were to live forever.” Or as Seneca the Younger stated, “As long as you live, keep learning how to live.”
So, as graduates, should you be optimistic or pessimistic? A number of nationalities walk into a bar and are asked, “are you optimistic or pessimistic?”:
• the Englishman says, “pessimistic, Brexit & Remain”;
• the Scotsman says, “pessimistic, Brexit & Referendum”;
• the Irishman says, “pessimistic, Brexit & Border”;
• the American says, “pessimistic, Trump”;
• the Italian says, “pessimistic, elections”;
• the German says, “pessimistic, Euro”;
• the Australian says, “pessimistic, North Korea”;
BUT the World Trader says, “optimistic, pessimism is for better times.”
And you have such great opportunities. The world is changing as never before, socially, technologically, economically, and politically. It may be a bit crowded now, seven billion people is over double the world I was born into, but even that will change as we are looking to demographic numbers reversing direction about 2050. You will have outstanding chances to use your learning. You will never stop learning and trading.
May I ask you, the graduates, to go forth inspired by the motto our Worshipful Company of World Traders traded with Thomas Jefferson from 1801, “COMMERCE AND HONEST FRIENDSHIP WITH ALL.”
May I wish all of you the success you will earn.
Thank you.
I had a wonderful time at the City Debate last night, Tuesday, 6 March. Here’s a photo of all of us at the start:
You can spot Ruth on the left, with Angela Knight in the centre who chaired proceedings, and Alderman Alan Yarrow both as Chairman of CISI and as Lord Mayor Locum Tenens. The pre-debate vote was neck-and-neck, 51% “no” (Antony and my side) and 49% “yes” (Ruth and Nikhil’s side).
From the questions it appeared a hostile audience to Antony and me. I had that queasy feeling you don’t like when you’ve volunteered for a competition just for the fun of it, then suddenly realise you could lose in front of all your friends. How can one’s self-esteem ever recover?
Now you can see me in full ‘must win’ mode, or as my friend George Littlejohn would have it – “Michael could be up for playing Churchill come the next biopic.”
City Debate 2018
Thus it was a genuine surprise, and relief, to find that we moved the audience significantly to our side, 73% to 27%. Whew.
In case my position had anything to do with swaying opinion, I set out the case against, below:
“This House Believes That Fintech Will Save The City” (NOT)
Lord Mayor Locum Tenens, Your Excellencies, Fellow Aldermen, Distinguished Guests, Ladies and Gentlemen.
You heard Antony’s compelling words. My argument balances his. If Fintech doesn’t destroy you, then … Fintech will remain, a small comfortable parasite on the technology and trade centre that is our global City. So what is the City, what is Fintech, what needs saving?
Yesterday, the Inspector of Ancient Monuments assured me that London’s archaeological evidence proves over 100,000 years of trading. I ask you, many of you too also ancient monuments before me, to join together and take a long-term perspective. Bloomberg across the road sits above two millennia of Londinium. We convene over a millennium old stocks market. Gresham’s Royal Exchange opposite is over 450 years old.
With the tragic exception of Edward I’s expulsion of the Jews in 1290, what distinguishes London is that, by comparison, it has treated all comers from outside the walls fairly, so long as they adhere to “meum fidem, meum pactum”. Lombards, Huguenots, Rothschilds, Warburgs … Mainellis.
We are an SME City. 24,000 businesses provide 483,000 jobs in the square mile, with 1,200 more each year. Yes, 250 firms provide 50% of the jobs, but they work with 23,750 deal-making SMEs. Large and small produce 3% of UK GVA from less than 1.5% of the workforce, three quarters of the UK’s services trade surplus, some £68bn.
Urban legends mislead us. The City was a deal centre before and after WWI, but was a feeble financial centre from 1939. The finance legend was kept alive by Italians and Americans, Autostrade in 1963 creating Eurobond markets on neutral territory. When Thatcher lifted exchange controls in 1979 and Big Bang broke cartels, financial services boomed. Most of today’s behemoths were SMEs 30 years ago. Bloomberg dates to just 1981.
You’ve heard of a Baker’s Dozen, 13? I recently learned that a Banker’s Dozen is 11. Just seven banks, not even 11, gets you to over 95% UK market share. Cartels remain. Domestic banks pursue a decades old, yet rational, strategy of hampering account switching. If you want to be a success in retail Fintech, go to a country with over a thousand banks, Germany, or over six thousand banks, America. Make some marketing director’s career rather than annoy a UK bank strategist.
Our retail fintech story is government lies for children, baubles with no Christmas tree:
Then we put our regulator in charge of a sandbox, letting government bottlenecks choose our winners. Any country whose regulator is in charge of innovation has deep problems. The wider City is lawyers, accountants, maritime, insurers, not a fintech pimple.
Google Trends awards the term ‘Fintech’ around 100 points. In January 2015 it was an insignificant six points. Our government claims creation of a sector it didn’t even notice four years ago, putting some mobile app lipstick on the antiquated systems of some oligopolistic banks.
I came to the City in 1984 to put computer technology into Messels, then Shearson-Lehman-Amex. We old-timers should celebrate the progress of automating wholesale finance. We’ve been doing real Fintech long before this insulting term was mashed up. It’s as facile as saying your heartbeat keeps you from dying.
London is a science & tech city. From Tudor ‘New Learning’ to Gresham College, Francis Bacon, the Royal Society, Industrial Revolution, Wheatstone telegraph, or DNA (the work was done at Kings, not Cambridge), London has been at least as much about science & tech trade as it has been about finance. Technology-Media-Telecomms is a significantly larger percentage of firms under 100 employees than finance, insurance, or professional services. Our centuries of tech drive regtech, instech, arttech, filmtech, songtech, medtech, edtech, traveltech.
Finance moves with technology too, from cuneiform to papyri to tally sticks to spreadsheets to databases and now databases-plus, smart or distributed ledgers, blockchains. But smart ledgers are ‘wide tech’ for identity, documentation, and agreement exchanges, not just payments. Tech is for all sectors and the City of London is the most intense place on the planet to do tech deals.
So does the City need saving from Brexit, the wider UK, perhaps AI? To paraphrase Streisand, “people who need to trade with people, make London the luckiest City in the world”. As long as we focus on face-to-face, commercial, global deal-making that AI and telecoms can’t replace, deal support will thrive, from financial and professional services to hotels, culture, healthcare, or entertainment.
With or without Brexit, we need quality education and training, health, infrastructure, broadband; airports (plural); an in-visa-ble as possible access to people; a functioning housing market; a simple tax system. If Britain is open for business, try opening a bank account. What always needs saving is the rule of law, innovation, and open deal-making. We are deficient, but not desperate; in danger of having our Emperor’s clothes disrobed, but with time to knit some new garments.
In conclusion, profound changes would be needed to even start to be a standalone Fintech centre. Silicon Valley, in total, is still only half the size of London. Fintech propaganda hides three decades of wholesale finance automation. Our real strength is over 500 years of wider technology and open trade. Sell Trade in Tech not Fintech.
So, do you vote for deep tech or mobile gimmicks, do you vote for City deals or for Canary Wharf turkeys, do you vote for people or machines? Our centuries of success are built on growing SMEs in open, global trade, not some three year old government mashup. Please vote for yourselves, the deal-makers of London, not this facile motion.
References
The Financial Services Group of Livery Companies asked me to provide an inaugural FSG Lecture in memory of its Founding Convenor, Jeremy Goford, Past Master Actuary“London Forever! Reality or Rhetoric?” I was pleased to deliver it on Wednesday, 20 September 2017 at
Mercers’ Hall, London.
Though I met him late in life through the livery movement, Jeremy and I enjoyed many conversations and disputations on the auditing, accounting, and actuarial professions, especially their use of numbers. Jeremy’s love of our City was palpable. I was delighted that the Financial Services Group of Livery Companies chose to honour his memory with this inaugural lecture, While you can read the full transcript, with slides – Jeremy Goford Memorial Lecture – London Forever – Reality or Rhetoric 2017.09.20 v1.3
a summary was published in Fintech Finance on 25 September, reproduced below:
London Forever! Reality Or Rhetoric?
This month, Z/Yen Group, published the 22nd edition of the Global Financial Centres Index. GFCI 22 showed almost all major financial centres following the downward lurch of London and New York in GFCI 21. In the top 20, only Frankfurt rose, quite significantly due to many London bank announcements of headquarter moves.
Finance only exists to support the ‘real economy’ of commerce and trade. This telling tumble among financial centres is due to fears over trade, not finance. ‘America First’, isolationist rhetoric damages perceptions of future US trade, while Brexit rhetoric harms perceptions of UK and European trade.
With so much changing, it is right to ask whether London will forever be the premier global centre for professional, business, and financial services. Financial centres do rise and fall, from Amsterdam to Izmir to Zanzibar. The 1375 Catalan Atlas of the known world by Abraham Cresques of Mallorca has an inscription: “This lord is Musa Mali .., so abundant is the gold which is found in his country that he is the richest and most noble king in all the land.” Musa hailed from Timbuktu in today’s Mali.
London’s five centuries of success are due to a sustained confluence of several factors, the ‘accidental’ ones being maritime location, early infrastructure, Continental wars, and the rise of the USA over the past century. Our index comprises well over 100 ‘intentional’ factors, but I would emphasise the business environment, a trading culture, and the rule of law. However, people like simple answers, not statistics. So just two things, structural intensity and fair treatment.
All cities are intense, but structural intensity is special to the City of London. With only 9,000 residents and 450,000 commuting workers, it’s a 98% chance anyone you meet on the street is working. And Crossrail’s success will raise that chance to 99%. A temperate climate, twisting alleyways, and numerous drinking places ensured that from the time of the Tudors financial workers met each other frequently. From pubs to coffee shops to Americano & Cappucino networking centres, supplemented by air transport and IT.
While the UK’s £61 billion trade surplus from financial services is exported via electronic pipes, deals need face-to-face trust to start, and often to complete. We need to keep raising that intensity of contact as the City of London Corporation is doing by planning for significantly more pedestrians. Video-conferencing supplements deals, but we still need to meet, often unplanned.
The belief that all comers will be treated fairly has been a London success factor since the 1290 mistake of expelling the Jews. London’s subsequent welcoming history needs no recounting, from Lombards of old to welcoming back the Jews in 1655 to today’s Syrians. All were increasingly treated with the same commercial rights as Englishmen. Rule of law is crucial, but long before anyone goes near a court, any nation that wishes to prosper must trade from an open and competitive environment. Competition needs a well-educated populace with a state sector preventing cartels, barriers-to-entry, information asymmetries, and agency problems, while not crowding-out markets.
If we get our own house in order, trade will come. Brexit doesn’t change the basics. You can’t be an international centre without international people. Successful people want to live in successful places. Successful places are cosmopolitan. Reputation is vital: 20 years to build and five minutes to ruin. We have problems certainly. If Britain is open for business, try opening a bank account.
We have problems certainly. If Britain is open for business, try opening a bank account. With or without Brexit, we need to stimulate investment in quality education and training, health, infrastructure, broadband; sort out the airports (plural), make the nation as ‘visa less’ to get to as possible, make financial account-opening a one minute process, create a competitive housing market, simplify the tax system, and so on. Brexit adds the complexity of ‘transition’ being woefully unclear, ‘trade’ structures breaking down, and welcoming ‘talent’ uncertain. So we need swift decisions on timing, on terms-of-trade, and talent, for example stop prevaricating on EU nationals’ and students’ status.
Our reality must rise to meet our rhetoric, but it was ever thus. In the history of London we see the truth of Aldous Huxley’s comment, “The charm of history and its enigmatic lesson consist in the fact that, from age to age, nothing changes and yet everything is completely different.” Making London a great place to live solves most problems. We need to be honest about our faults and not let false rhetoric impede fixing them. We are deficient in some areas, but not desperate; in danger of having our Emperor’s clothes disrobed, but with time to knit some new garments.
We’ve been being told for well over a year what we supposedly voted for in a non-binding referendum. Whatever, the vote was certainly a vote for change. Quality guru W Edwards Deming sets a low bar for the lazy: “It is not necessary to change. Survival is not mandatory.” I am sceptical about claims that we businesspeople will find fabulous fortunes hitherto overlooked in far-flung foreign lands, but I am very positive the closest opportunity is change for the better at home, toward improved structural intensity and fair competition. Londoners are certainly not lazy.
Trade reaps economic benefits from specialisation and comparative advantage. Trade creates prosperity, shares success, and enriches our environment. Trust holds all trade relationships together. The clearest sign of trust is that people want to live and work in London and the UK. If we keep that, we keep everything, including the top spot a century from now in Global Financial Centres Index 222.
