IMF’s Global Financial Stability Report Calls For Lower Banker Pay

Banker compensation may get more complicated and have fewer zeroes if the International Monetary Fund has a say.

The IMF’s most recent Global Financial Stability Report evaluates executive pay, corporate governance and risk-taking in some of the largest banks around the world and recommends policy measures to ensure only prudent risk-taking is rewarded.

While a number of quantitative and qualitative factors contributed to the global financial crisis, the report argues that structure of executive compensation encouraged bankers to take shortsighted risks with lasting negative impacts:

The causes of such risk taking were many and complex, but there is general agreement in the financial industry, the public sector, and academia that incentive structures at some financial institutions played an important role.

Other contributors to reckless risk-taking were weak regulatory frameworks and boards of directors that were not independent of banking operations.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza