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20VC: First Republic; Management Responsibility or Result of Contagion in the System, The Future of Regional Banks, Will Interest Rates Go Higher | Net Zero, Where Are We? The Best and the Worst Actors with Mark Carney, Former Governor of The Bank of Engl

May 1, 2023

Mark Carney, former Governor of the Bank of England, currently serves as Vice Chair at Brookfield Asset Management and UN Special Envoy on Climate Action. He discusses the current state of banking, questioning whether the crisis is truly over or just beginning, and predicts a wave of consolidation among regional banks. Carney also dives into the implications of high interest rates for growth and monetary policy, while linking finance to climate action, advocating for responsibility in emissions reduction, and emphasizing the need for sustainable investments.

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INSIGHT

Banking Turmoil vs. Crisis

The banking turmoil is not a crisis, but serious turmoil with potential recessionary impact.
Regional banks face challenges due to low-yielding assets and competition, requiring consolidation.

ADVICE

Guaranteeing Bank Deposits

Guarantee all bank deposits to restore consumer confidence, but ensure strong capital requirements.
Implement senior debt and contingent capital to maintain discipline and protect taxpayers.

INSIGHT

Future of Regional Banks

Regional banks should either go small and focus on insured deposits or consolidate into larger institutions.
Fintech competition and the move towards narrow banking are driving this consolidation.

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Mark Carney is the Vice Chair and Head of Transition Investing @ Brookfield Asset Management, one of the world's leading asset managers with over $800BN in AUM. Mark is also United Nations Special Envoy on Climate Action and Finance. He has also served as Finance Advisor to the British Prime Minister. In addition to this, Mark is on the board of Stripe, PIMCO and The World Economic Forum. In a previous life, Mark spent over a decade as a Central Banker, most recently as Governor of The Bank of England and before that as Governor of The Bank of Canada.

In Today's Episode with Mark Carney We Discuss:

1. Is The Banking Crisis Over? What Happened?

Why does Mark not believe we are in a banking crisis?
Why does he not believe the banking turmoil is over?
Was SVB the fault of regulatory mistakes or management mistakes?
Is FRB a damaged asset in it's own right or the result of contagion within the banking ecosystem?

2. The Impact of the Banking Turmoil: What Happens Now?

What does Mark believe is the future of regional banks?
Why does Mark believe we will see massive consolidation in banks coming soon?
Should the Fed be guaranteeing all deposits automatically?

3. What Happens To The Macro Now?

How does the banking turmoil impact growth rates? Will we definitely go into a recession now?
What is the impact on monetary policy? Can the Fed raise rates even higher?
What does this mean for the future of money? Why is it a silver bullet for stablecoins?
If Mark could bet on China or the US for the next 10 years, who would it be?
Does Mark believe the UK is in a weaker situation than ever? What about Europe?

4. The Future of Climate and Net Zero:

Where are we at with Net Zero? Are we ever going to make progress?
Is it possible to make progress without the cooperation of China?
Why does Mark disagree and suggest China has done more than most to help the climate?
Who is talking more than they are acting in the fight to save the climate?
On the flip side, who is acting more than they are talking?