10 minute read
Committee on Financial Markets (CMF) Mr. Aerdt Houben
1. What is the mission and mandate of your Committee?
The Mandate of the Committee on Financial Markets (CMF), adopted in 2015, states: "The overarching objective of the Committee is to promote efficient, open, stable and sound financial systems, based on high levels of transparency, confidence, and integrity, so as to contribute to sustainable and inclusive growth."
The mid-level objectives of the Committee are to: a) contribute to better policy approaches for the financial sector, by fostering the contribution of financial institutions and capital markets to the financing and risk management of businesses, individuals and governments, and therewith to sustainable economic growth; b) enhance the long-term efficiency, resilience, transparency and sustainability of financial systems, including through the promotion and collection of internationally comparable financial statistics ; c) promote efficient and transparent public debt markets; d) promote effective financial education and consumer protection and the ability of individuals and businesses to access and use financial services and address risks.
This year, The Committee of Financial Markets and its sub-bodies, the Working Party on Debt Management, the Taskforce on Long-Term Investment and the Task Force on Financial Consumer Protection will seek to renew their mandate with the ambition to further strengthen their relevance and policy impact. In this respect, the Committee has actively engaged with stakeholders to develop in-depth analytical work and policy considerations related to global financial markets, sustainable finance, and digitalisation of finance. The committee has sought to integrate this work with subbody initiatives on public debt management and also quality infrastructure.
2. You have been designated Committee Chair. What is your background and what has convinced you to take up this post? How do you consider your background and experience contribute to such a role and function?
I am Director of Financial Markets at De Nederlandsche Bank, CMF chair and member of the Committee on the Global Financial System and the Markets Committee at the BIS. I was previously a member of the Basel Committee on Banking Supervision, the Financial Stability Committee of the ECB and the International Organisation of Pension Supervisors and have participated in numerous other policy committees within the FSB, ECB and the ESRB. I am a Professor of "Financial Policies, Institutions and Markets" at the University of Amsterdam.
I am happy to bring my expertise in financial markets and my long-standing relation with global fora to the service of OECD Members and Partners in order to advance insights and policy agenda’s on challenges facing the financial sector. My experiences as a central banker, regulator and policy advisor help me engage with
3. What is your main priority as Chair?
I want to ensure that the Committee’s analytical reports and policy recommendations are genuinely relevant, insightful and impactful. The Committee and its outputs should help delegates understand the developments in global financial markets with respect to opportunities to support sustainable and inclusive growth, as well as downside risks. Moreover, the Committee should provide an engaging environment in which Members share good practices with respect to the use of policy measures. In this regard, the Committee is committed to provide evidence-based analysis and policy guidance to support post-Covid recovery, climate transition, and resilient digitalisation of finance.
4. How would you define the added value of your Committee in relation to the work of the OECD in an international context? How does it differ from other international fora dealing with the same topic?
The Committee on Financial Markets provides a forum for Members and Partners to focus on trends and prospects in the international and major domestic financial markets, and to address common challenges and collaborate on new policy approaches.
The Committee meets twice a year for its regular agenda and holds one to two extraordinary meetings on a single topic, also engaging with private sector participants and with partner international organisations of global membership (IMF, the World Bank, BIS, IOSCO).
The Committee’s expertise is strengthened by inputs from ad hocstructures such as the Experts Group on Digitalisation and Finance, the Blockchain Centre and the Advisory Board of Debt Transparency Initiative, including through OECD representation in international fora such as the FSB or the IIF.
5. Are you facing any specific major challenge derived from the current multilateral environment?
The Committee has sought to keep its Members engaged notwithstanding the travel restrictions of the Covid crisis and the need to interact virtually. The current heightened geopolitical stress underscores the importance of multilateral dialogue.
6. How do you encourage, and ensure national experts engage productively in the work of your Committee?
The Committee gathers leaders from central banks, finance ministries and market regulators across 44 jurisdictions. I encourage engagement in several ways. First, I have sought to expand the Bureau to ensure a better representation across gender, geographies, and institutions. Also in addition, in committee meetings, I encourage active participation by all members, and welcome diverse views based on national experiences. Also, the Secretariat is attentive to have all of its analytical and policy outputs reviewed and discussed by the Committee Members.
In terms of formal outreach, regular surveys are conducted among Delegates on the Programmes of Work and Budget, annual workplans, themes for market roundtables, and even on the availability and use of policy measures. Also, retrospective exercises such as the Programme implementation report (PIR) and the InDepth Evaluation, inform us on our most relevant work streams and topics we need to develop, helping me steer the planning of activities on the medium and long-term in order to assure productive engagement.
7. How do you help maximise policy coherence through the work of the Committee?
We must ensure that our work is coherent, and appropriately differentiated among international standard
setters on financial systems. Our role is to find the correct balance between ground-breaking policy and setting reachable standards that can help shape international consistency by guiding national authorities to ambitious policy and good practices. For example, in topics that range across Tokenisation, Decentralised Finance and Blockchain policy; ESG, Climate Transition and also Debt Transparency; the Committee’s recent work is fast-paced, ambitious and globally impactful.
8. How do you ensure effective decision-making by the Committee?
Effective decision-making is achieved through thorough preparation and clarity of objectives and options. To achieve this, I benefit from a dynamic CMF Bureau and dedicated Secretariat that help me consider and prioritise those issues that merit engaged discussion by the Committee. In this respect, a well-functioning Bureau is instrumental to assess areas of potential divergence of views across member institutions, and potential areas of agreement.
Also, the Secretariat ensures strong preparation for each meeting, with documents that clearly identify developments, opportunities and risks, and policy considerations.
With this structure, our Members are able to effectively prepare for and intervene in meetings in meaningful ways.
9. Could you mention the most important documents/reports that the Committee/Group has issued in the last 2 years? Why are these important and what has been their impact?
There are a number of important reports that have been published by the Committee during my time as Chair. During the Covid period, the Committee published reports on how government crisis programmes helped absorb the shock, while also anaylzing the potential impact on banks and identifying possible unintended consequences. In areas of emerging interest and expertise, the Committee has issued several reports on sustainable finance, with a focus on ESG investing and climate transition, including an input report to the G20 Sustainable Finance Working Group. More specifically, the Committee’s reports onFinancial markets and climate transition: Opportunities, challenges and policy implications of ESG investing and ESG investing and climate transition: Market practices, issues and policy considerations were launched at the OECD Ministerial Meeting side event on 4 October 2021. This event also hosted a high-level panel discussion on Strengthening ESG approaches and market alignment to foster climate transition. Other publications of the Committee on this topic are Trends in ESG Investing and Quality Infrastructure Investment in Asia-Pacific, Sustainable and Resilient Finance : 2020 OECD Business and Finance Outlook, ESG Investing: Practices, Progress and Challenges, ESG Investing: Environmental Pillar Scoring and Reporting.
The Committee participates in horizontal projects across the OECD as part of its mission to monitor market trends. In this framework, the report The rise of non-bank financial intermediation in real estate financewas published late last year and another report is under discussion for publication this year, Climate-transition and green finance in real estate.
Through its work on FinTech and Digitalisation of Finance, The Committee assesses developments in financial technologies and their impact for markets and the financial sector. In the rapidly growing digitalisation of finance, the Committee’s Experts Group on Finance and Digitalisation contributed to the publication of reports on Tokenisation of assets, Artificial Intelligence (AI), Machine Learning and Big Data in Finance, and Decentralized Finance (DeFi).
10. How can you encourage synergies between policy communities?
The Committee meetings include representatives from IMF, ECB, BIS, the World Bank, which allows for natural synergies in the Committee meeting discussions. Also, the OECD management is very active in bodies and international fora, where they highlight the CMF report findings and policy recommendations. In this respect,
the CMF’s output has contributed to the FSB, NGFS, APEC, G20 working parties, as well as regional financial fora.
Furthermore, the Taskforce on Long-Term Investment delivers important work in collaboration with the G20 Infrastructure Working Group.
11. How do you see the role played by the Secretariat?
The Secretariat plays a critical role in the functioning and work of the Committee. First, by organizing the Bureau and Committee discussions in an effective manner that prioritises key issues, based on Members’ needs. Second, by providing high-quality research that stimulates substantive discussion and new insights. The Secretariat ensures constant engagement with Members and reaches out to outside experts and partners, including in ad hocdiscussions. Third, building on the analytical findings to develop policy recommendations. And, fourth, bringing the Committee’s work to other international fora where it can further influence policy discussions.
12. In relation to the standard-setting role, what do you suggest to maintain the relevance and impact of OECD standards over time? Which areas need strengthening?
For the Committee on Financial Markets, the relevance and impact of the OECD standards over time depends on the structural developments in the financial system, as well as exogenous developments such as Covid-19 and climate risks. For this reason, the Committee is developing new legal instruments, and also plans to modernise its flagship legal instrument called the Policy Framework for Effective and Efficient Financial Regulation, with the aim of updating it to incorporate financial reforms, as well as sustainable finance and digitalisation considerations. This will give our standards new meaning to reflect the evolution of market practices to address risks.
13. How have you ensured a contribution of your actions or influence to continuous improvement within the Organisation?
I strive to make an impact through my role as Chair, by focusing on the financial market issues that truly matter, while avoiding bureaucratic pitfalls.
14. What are the practical implications of the work of your Committee/Group?
The Committee develops analysis to help members understand developments, benefits, risks and policy implications of Covid-19 government financing programmes, market intermediation, sustainable finance and climate transition, and digitalisation of finance. By assessing these themes, the Committee is able to put forward policy recommendations and good practices. This work benefits our Committee member institutions by offering depth of assessment as well as a cross-country and cross-market comparison of activities, risks and use of policy tools. In this regard, our work contributes to making our member institutions more effective at achieving their missions, and contributing to the wellbeing of societies.
Even beyond the membership, our work is contributing to capacity building programmes run by the Secretariat in emerging markets and low income countries.
15. What would be your key advice to a person taking up the post of Chair of an OECD Committee/Group?
Promote transparency and inclusiveness in Member-driven initiatives. Have a vision, yet be open minded to listen to Delegates from across the membership, to understand their prime concerns and to map out how best to address the challenges they face. Understand the most efficient way to engage with members to move their priorities forward and have fun when you are doing this.
