Stabilization: what to do now The global capital markets As we learned from prior systemic shocks, the global capital markets industry is a highly interconnected have continued to function and sometimes fragile ecosystem. Working with regulators, governments and trade bodies, industry well through the current players must collectively identify points of dislocation and react accordingly to prevent economic contagion and dangerous “beggar thy neighbor” behavior. The industry should be providing funding period of significant market and liquidity to ensure that the global markets, specifically the credit markets, continue to function. volatility, interest rate cuts One might want to call this “achieving ecosystem resiliency”. and diverse global stimulus Each underlying segment of the global capital markets industry, from investment banks and wealth managers to asset managers, will have to play a critical role as a systemic stabilizer for their customers, packages. The immediate their employees and their economies at large. priority now, however, is to Institutional and private investors have complex investment portfolios with multiple participants, many prevent the public health of whom will experience simultaneous stress. Consequently, the industry needs a holistic view on crisis from becoming an potential weak points to avoid spreading that stress to other market participants. enduring financial crisis. In our view, how the industry deals with delinquency and credit impairment within these portfolios will be important for the unfolding, larger economic effects. If they try to sell assets too quickly, this could lead to further economic shocks. While those institutional and private investors will have to stabilize their impacted portfolios, they will also need to quickly develop and implement cost optimization strategies to protect their franchises. More broadly, we feel the industry also needs to ensure that the fundamental tenets of crisis management are in place: being clear about intent, starting the mission, allowing flexibility to revise the plan and adjusting as necessary. This approach should bring to life the even more agile ways of working that many firms have already adopted in recent years. 3