??Transparency turns change into progress

Two months went by since I wrote this page about Davos on my Fintech journal. The spotlights of the World Economic Forum 2019 illuminated for one week the snows of this charming corner of the Swiss Alps, where a panoply of global leaders gathered to discuss the risks and the socio-economic opportunities of the fourth industrial revolution in a world that becomes increasingly complex, technologically interconnected and humanly "multi-conceptual".

The beginning of the 21st century has been so far characterised by a transformation of interpersonal relationships due to social media and the crisis of the system of competences which powered capitalism after the second world war but is now becoming inadequate. The development of exponential technologies is certainly contributing to a deep transformation of western world economies, which largely affects the functioning of financial services. The disruptive role of digital innovation has been the core topic of many debates, everybody discussing how to ensure that technology contributes in a constructive and inclusive way to the architecture of Globalization 4.0. Two widespread concerns ignited each debate: the increase of global uncertainty and the protracted crisis of confidence in financial and political institutions.

Civil society seems to have lost faith in the ability to cope with the challenges of economic change, which requires the acquisition of new skills in a short period of time. IBM CEO Ginni Rometty highlighted the need of a bi-partisan agenda in a public conversation with the Financial Times, inviting to "think in a new way" to reform the education system with apprenticeship programs that facilitate the transition to new professions and new ways of working interaction. Professional and cultural training is a necessary action to mitigate personal uncertainty and help today workforce to embrace a future made of different job opportunities. However, uncertainty is not only growing at personal levels but also internationally across geopolitical systems, making economic planning and policy-making increasingly difficult and affecting risk-taking. ECB President Mario Draghi, mastermind of an unprecedented rescue of the European financial system, told the press "we are not afraid of uncertainty” towards the end of the forum, recalling and strengthening his 2011 "whatever it takes". Central banks’ intervention remained extremely muscular in recent years, attempting to favour orderly risk taking among companies and families. This was welcomed by many businesses, but also generated criticism for the potential long-term consequences on the economy. UBS CEO Sergio Ermotti expressed his concerns about the continuation of such an expansive monetary policy which, although necessary, has distorted the pricing of risks and affected the allocation of long-term resources.

I had the flattering chance to take part in this alpine debate by sharing the latest findings of my research journey, culminated in my fourth and latest book about innovation of economics theory which was launched in Davos: “Financial Market Transparency”. After hundreds of thought leadership meetings with C-level decision-makers internationally, I believe there is a sincere call to anchor the current debate on a new theory of value centred on transparency, which only can generate consequentialist ethics allowing to turn change into progress and financial inclusion.

Transparency corresponds to the “invisible hand” made visible: the ethical micro-foundation of an inclusive and digital modern economy.

In fact, only regulatory transparency (underpinning the European MiFID II regulation) can create trust against growing uncertainty by promoting a dynamic realignment of economic interests (personal and corporate) with a view to protecting investors and the environment (UN Sustainable Development Goals).

Only transparency makes current ESG debate a real opportunity for change.

Only transparency about the usage of data turns privacy into a respectful economic opportunity.

Only transparency can make Artificial Intelligence truly explainable and unbiased.

Only transparency about production cycles grants blockchain and IoT their ultimate consumers value (traceability, origin, eco-sustainability).

Transparency must be the founding element of the new value-based architecture that shapes the fourth industrial revolution beyond existing economic uncertainty, starting from the impact of fintech, regulation and artificial intelligence on financial services. Learn more with my philosophical and economic essay "Financial Market Transparency".

Stay tuned for next article 03-2019 about my conversations with the oracle of Delphi.

[This italian version of this article firstly appeared on Bancaforte]

Paolo Sironi's books can be found on Amazon or his author's page thepsironi.com