Finance covers many important issues, such as credit, investments, risks, growth - and therefore jobs - and public debt, with all of these elements contributing directly or indirectly to the well-being of the communities we are part of. Last Friday, I spoke at the graduation ceremony for the Executive Master in Finance at SDA Bocconi. My message for all the young professionals who had just finished their post-graduate course at this Milan university was they faced a critical moment for their future, because finance is a rapidly changing sector and because they'll play a crucial role in the future of the world.
Finance has an enormous impact on a community. Take, for example, the 2008-2009 crisis which began as a credit and financial crisis. However, it rapidly descended into an economic and social crisis that eventually became a political and geo-political crisis, the consequences of which, particularly in electoral terms, are still evident for all to see. The stunning paradox is that many of the problems underscoring the eruption of that crisis remain today, such as the weight of debt, which in many cases has merely changed ownership, or complex assets that have often done little more than change name. The risk of new bubbles has even grown with the aberration of negative rates.
For finance to be truly useful for a community, it must always be seen as a tool and not an end. As obvious as it might seem, even recent history shows us this has not always been the case. Finance needs to learn from its mistakes and free itself from the dogmas of neo-liberalism that have proven to be fallacious. The market cannot, in practice, self-regulate and it doesn't always move towards equilibrium. Plus, markets are not always liquid and, above all, people working in this industry don't always act rationally. As I said to those recent graduates, they have an incredible opportunity to show they are wiser leaders of this sector than their predecessors. And this opportunity is magnified because it comes at a time when the geography of finance is changing radically as the growing importance of Asian players, to the detriment of their North America and, especially, European counterparts, shifts from investment bankers to asset managers.
Our countries need responsible finance to ensure sustainable growth. Such finance must provide companies with resources, facilitate innovation and promote the creation of new infrastructure. And such finance mustn't be a slave to the short or extremely short-term, as such short-term visions often become the greatest enemy of sustainability.
I also had a final message for those young people. Being a wise and responsible ruling class means exploring problems such as these, and dealing with them every day. The most successful countries aren't those with the most natural resources or the best-stocked arsenal, but those with the best ruling class. Such a ruling class needs to be competent and have a broad overall vision, able to look beyond its own personal interests and have the courage to face and embrace change. Such a ruling class is wise and responsible, accepting the burden and honour of looking after the common good in major and everyday decisions.