A good working relationship between government authorities and financial institutions is vital if we want to deal with future crises. They may still feel a little uncomfortable in each other’s company but Rebel is there to put them at ease.
Lessons for the future
The crisis has made painfully clear that the financial sector is much more a matter for public-private cooperation than was previously thought. For years, the financial sector could perform any number of balancing acts in the knowledge that a safety net made up of the state and its tax paying citizens would be in place. That situation is no longer tenable. We believe that lessons can be learnt from our present predicament. With our PPP knowledge and experience we can stimulate government authorities and financial institutions to turn the crisis around and cement their relationship at the same time. We do this by setting up a transparent economic framework in which the briefs of both parties are not only clearly defined but also valued.
A clear relationship between the financial sector, government authorities and citizens will secure decisive action from all concerned in times of crisis. We are convinced positive change can be achieved if state guarantees to banks, for instance, were to be priced correctly. The state, as the main risk bearer, would also be the beneficiary of unforeseen budget windfalls. Changes like this give the right incentives to the financial market: financial institutions will be forced to handle risk more responsibly and not to engage in dangerously high risk enterprises precipitately. Based on this line of thought we developed a road map for the Asian Development Bank, streamlining PPP projects.
Future crisis management
Rebel creates a financial risk management structure with the financial sector, one that includes the relationship with the public sector. It may be a little strange at first but eventually it will create a bond between the public and private sectors which will make future crises easier to handle.