While we say uncertainty we immediately imagine any phenomena with the unknown or unexpected results. The expansion of globalization and a new wave of technical progress, when almost daily some new innovations come to the market and the replacement the existing products or technologies have become a “routine” event. This way hhe Uncertainty gradually has been occupying major part of our lives. It turns sometimes upside down large segments of the various markets, political, financial and social spheres of our lives.
Uncertainty definitely requires new ways of management on all levels and in all areas of the economies, which should be more adaptive rather than just strict follower of existing management laws and models. It definitely shakes whole banking sphere because the “good” old ways of banking management are not always applicable today. While the banking capital is growing very fast globally, competition on the macro and micro levels requires fast decision from banks to move the economies forward.
It looks like that in order to address the uncertainty situation banks should adjust or change their operational rules and paradigm overall. We discuss this problem with Maria Demertzis. Maria Demertzis, PhD is Deputy Director at Brussels – based economic think tank – Bruegel and a visiting professor at the University of Amsterdam. She has previously worked at the European Commission and the research department of the Dutch Central Bank. She has also held academic positions at the Harvard Kennedy School of Government in the USA and the University of Strathclyde in the UK, from where she holds a PhD in economics.
In this interview Maria Demertzis answered two questions concerning some aspects of uncertainty management:
- Now we face a very unique situation of at least three big macro events unfolding almost simultaneously – Brexit , 100 days of new American President and elections in Germany and France, which all together strengthen the uncertainty – can you share with us your thoughts on how banks could at least try to manage such uncertainty ?
- The uncertainty versus risk management – if risk can be managed and predicted (to an extent) and uncertainty cannot be managed and predicted what should policy makers do to minimize losses for population?