Banks and other financial institutions have attempted to increase profits by taking on additional risks, which is common to all crises in the U.S. Reflecting on American crises, James C. Ellert, Professor of Finance and Strategy at IMD (International Institute for Management Development) in Lausanne and guest lecturer at the Bled School of Management (IEDC), began his final lecture at the Zagreb Stock Exchange Conference.
The financial system is still not sufficiently regulated to prevent future crises, which is the main lesson that can be drawn from Ellert’s lecture. In his opinion, financial derivatives should be more strictly regulated and should not be traded on OTC (Over the Counter) markets; instead, their trading should be organized in a manner similar to how trading of other financial instruments is regulated on exchanges. He also advocates that banks should transparently display the value of such instruments on their balance sheets.
It is estimated that the global derivatives market is worth $615 trillion, while the global GDP is estimated to be ten times less ($69 trillion), leading to the conclusion that some future crises arising from misjudged risks of derivatives are still not excluded. Since Professor Danica Purg, also from IEDC, apologized for being unable to deliver her lectures on the importance of educating leaders for the future due to illness, Ellert emphasized that investing in education is an investment and that it is very important to educate management as it is crucial for developing the economy and achieving regional goals that inspire everyone. (Jasmina Trstenjak)
