New technology can help ease the financial sector

Make the tax system less painful! That’s one of the suggestions which Professor Simon Johnson has recommended for those managing the economies of Barbados and the Caribbean countries.

 

While not specifying any one country in particular, Professor Johnson said: “We need better governance, we need to utilise electronic government, you need to make the taxes much less painful, you need to have better systems to record economic activity.” 

 

The United States-based Professor Simon believes that with new technologies this can do more and to avoid another crisis the regional states have to pay more attention to the resilience of its financial sector. 

 

Dr. Johnson, Professor of Entrepreneurship, is a guest of the Central Bank of Barbados. He hails from the Peterson Institution in Washington D.C. and covered a wide range of issues in his 90-minute presentation, including reforms necessary to future outlook for the global economy, Digital currency, and oil prices. He was quizzed by Broadcaster Julian Rogers, and fielded questions from the audience, as well as from across the region, and some submitted via email. 

 

The Economist said that to avoid another global economic slowdown there is need for more capital in the financial system as well as additional equity financing. A little equity will not be enough to withstand the damage. As to when the next global economic/financial crisis is likely to occur, Dr. Johnson said he is not in the habit of giving either a number or a date for such an occurrence.

 

He also noted that there is considerable volatility around the world including China, other emerging market economies and Europe which is still struggling to recover and that will have some spill over effects.

 

The Professor agreed that because of the close ties between Europe and the Caribbean, this region could feel some fall out from the difficulties experienced in Europe. “You will be in trouble in many ways through financial flows and tourism, and probably your international business,” he reported.

 

Furthermore, talking about the cause of the 2007-2009 global financial crisis he highlighted that the structure of the financial system, the way some banks were allowed to become even larger and complex, was not fully understood by everyone. Dr. Johnson said they took massive risks, enriched themselves in good times resulting in problems for others.

 

The Professor agreed that while a lot of regulatory reforms had taken place in and after the crisis, it was not enough, and therefore more needs to be done.