The turmoil in world financial markets over the past year and a half has fundamentally altered the global financial system, according to Standard & Poor?s (S&P).
The role of capital markets is more crucial than ever, according to Deven Sharma, president of S&P and chairman of Crisil. ?In developed economies, the losses that many banks have made in recent years and the task they now face to deleverage, rebuild capital and comply with the new Basel regime means that they are constrained in their ability to lend,? Sharma said at an S&P-Crisil seminar held on Thursday.
?While banks in developing markets like India have proved resilient, there is a need to expand the sources of capital available for the economy. That means greater reliance on the capital markets,? he added.
India is emerging from the global economic crisis less scathed than most other nations. Its large, young, and growing population, rising income of the middle class, and high savings rate continue to support strong domestic demand. In addition, India?s financial sector remains healthy and its banking system sound. The country has a greater opportunity than advanced economies to address its constraints and create a prosperous ?new normal? for its economy. All this comes within the context of a changing global economic paradigm.
According to Thomas Schiller, executive managing director and region head of S&P Asia Pacific, ?There is a strong sense of hope that the new normal will be about environmentally responsible growth, poverty reduction, social stability, global inclusion and small-scale and targeted regional and local development programmes. There?s also expectation that it will be about the free flow of financial information and capital and the wiser use of regulation. This is the promise of capitalism that is more humane, reasonable and sustainable.?