The world’s banking system and the value of publicly traded shares on capital markets are roughly similar in size: both in the order of $100 trillion worth of assets. But the future may require capital markets to shoulder much more of the responsibility for investment and growth. This paper is about why equity capital markets are well placed to do that and why public policy should encourage it, in light of the distinct and positive risk-reward profile of capital market-based finance.

This paper sets out the thoughts of the world’s exchanges on this issue. The World Federation of Exchanges (WFE) represents over 250 venues where, among other products, shares are listed and traded in a transparent, accessible and user-friendly way.

We will look not just at the differences between (equity) capital markets and banking, which in benign times act as twin engines for growth, but also at their interaction. We will look at the related incentives and regulatory regimes. And we will look at the crucial differences in terms of risk, especially to the financial system.