Long-term Finance Economic Growth - Group of Thirty

Long-term Finance and Economic Growth

Working Group on Long-term Finance

The views expressed in this report are those of the Working Group on Long-term Finance and do not necessarily represent the views of the individual members of the Group of Thirty.

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Long-term Finance and Economic Growth

Published by Group of Thirty? Washington, D.C.

2013

Table of Contents

Abbreviations ............................................................................................................................................................................... 5 Glossary..............................................................................................................................................................................................6 Foreword ...........................................................................................................................................................................................8 Acknowledgments ...................................................................................................................................................................10 Working Group on Long-term Finance .......................................................................................................................11 Executive Summary ...............................................................................................................................................................13 Introduction .................................................................................................................................................................................. 17 1. Principles for an Ideal Long-term Finance Market .....................................................................................19

1.1 Long-term investment is essential for economic growth ...................................................................................................20 1.2 Financing long-term investment requires long-maturity

instruments and investors with long time horizons ............................................................................................................21 1.3 Four key principles should govern the provision of long-term finance .....................................................................22 2. The Current Financial System Does Not Efficiently Supply Long-term Finance ...............25 2.1 Worldwide demand for long-term investment is rising ......................................................................................................26 2.2 Current provision of long-term finance often fails

to conform with the principles outlined in Chapter 1 .......................................................................................................28 2.3 Three trends are likely to constrain the future supply of long-term finance ..........................................................43 3. Addressing the Challenges: Objectives and Specific Proposals ......................................................49 Objective I: Ensure investors are better able to take

a long-term horizon in their investment decisions ...............................................................................................................51 Objective II: Create new intermediaries and instruments

geared toward the provision of long-term finance ...............................................................................................................52 Objective III: Develop debt and equity capital markets in order to promote

a broad spectrum of financing instruments .............................................................................................................................54

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