Tan Sri Andrew Sheng: Financial system too short term; Some 83% of the financial system’s assets are based on short-term liabilities, financing longer-termed assets; “We are trying to solve a debt overhang, excessive leverage with more debt. Where is the asset?”

October 24, 2013 Leave a comment

Updated: Wednesday October 23, 2013 MYT 11:51:26 AM

Sheng: Financial system too short term

KUALA LUMPUR: One of the issues that needed to be fixed in the financial system was that it was being “too short-termed”, according to Fung Global Institute Hong Kong president Tan Sri Andrew Sheng. Some 83% of the financial system’s assets are based on short-term liabilities, financing longer-termed assets, he added. “We are trying to solve a debt overhang, excessive leverage with more debt. Where is the asset?” “The answer is that this has been a wonderful opportunity for an asset shift. It’s a structural and systemic issue that we need to think about,” he said during the afternoon session at the World Capital Markets Symposium held yesterday. Meanwhile, Sheng said that the global financial crisis that happened in the United States five years ago was not because of the failure to regulate markets but rather a failure of enforcement. “You realise that regulation does not solve all problems. It is not going to be easy moving forward as the rules require us to have more and more rules and frankly speaking I have personally lost the plot,” he said. He noted that the job of a regulator today was becoming “extremely complex” in the global financial system and that there was a need to understand it further.

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