FRANKFURT: Deutsche Bank Chief Executive Josef Ackermann said market volatility is the 'new normal' and the sovereign debt crisis will force banks to fundamentally change the way they manage risks and portfolios.
"We need to prepare for a prolonged period of volatility and uncertainty," Ackermann told a gathering of central bankers and regulators at a conference in Frankfurt.
"It is time to acknowledge this is the new normality. It will take years for the system to adjust for a new reality."
Ackermann said another big shift is the fact that sovereign debt can no longer be considered a risk free asset.
"This raises a number of fundamental questions. Which asset class will be the safe haven, which assets will be accepted by counterparties as collateral," the Swiss executive told the gathering.
Ackermann, who is also chairman of the banking lobby group the Institute of International Finance said this will fundamentally change risk management, and will result in a fundamental rebalancing of portfolios across the globe.
Comments
Comments are closed for this article.