Regular readers know that your humble blogger would like to see banks required to provide ultra transparency and disclose on an ongoing basis their current global asset, liability and off-balance sheet exposure details.
This information would be aggregated on a borrower privacy protected basis, standardized and made available to all market participants through a data warehouse that hosts what I refer to as the "Mother of All Financial Databases".
With this data, market participants could assess the risk of each bank as well as exert discipline on each bank's risk taking.
With this data, the interbank lending market would be unfrozen and unlikely to refreeze. This data is the key to on-going liquidity because market participants can continually update their assessment of each bank. In fact, market participants can do a much better job of matching each bank's cost of funds to the riskiness of the bank.
With a liquid interbank lending market, Libor could be based off of actual trades.
With this data, sunshine can act as the best disinfectant.
Through information technology, society has been given an opportunity to redefine the way individuals conduct their everyday lives.... Communities are in a position to share data amongst themselves, and with the wider world, improve services and the lives of individuals.For banking, data would no longer be constrained by national boundaries, but could be looked at from a global perspective.
The way societies use this information will transform the economy, quality of life, and resource consumption.
One core opportunity offered by information systems is the ability to manage utility networks within cities, such as the creation of a smart energy grid. If operators are able to collect detailed information about what is going on in the grid, they'll be able to manage it more efficiently, making the architecture increasingly robust, cost effective and ultimately provide better services to its citizens...The same should be true of the financial sector.
Information can also be leveraged in cities to encourage behavioural change....Bob Diamond said that culture is important for when people aren't being watched. Information technology dramatically reduces the reliance on culture by increasing the market's ability to watch.
But the implications of a data-rich world stretch far beyond the operational efficiency. The wide range of information at our fingertips is also driving a new competitive marketplace and transforming not only the economy, but also the way people, companies and governments choose to operate.
Global corporations are using information as a core asset, with companies like Google and Facebook building their whole business model around the availability of data and the public demand for information....Given the value in financial information, I would think we would see many new businesses started around the data made available through the 'Mother of All Financial Databases'.
Imagination is the often the biggest restraint when tackling global challenges.