The former chairman of the US Federal Reserve System and economic advisor to President Barack Obama, Paul Volcker, will give the keynote address at the 2012 Global Financial Markets Forum (GFMF) set to take place later this month.

The annual conference organised by the financial markets division of the National Bank of Abu Dhabi (NBAD), will commence on February 29 and concludes on March 1, a statement from the bank said.

The event which is in its fourth year will be held at Abu Dhabi’s Emirates Palace, the statement said.

Volcker’s keynote address is titled “The Future of Global Financial Markets and the Impact of the Volcker Rule”.

In his capacity as advisor to President Barack Obama,  he proposed a set of financial reform rules that included restricting commercial banks from proprietary trading, which he called “speculative trading” because it adds an unnecessary layer of risk.

In a recent conversation with GFMF's organisers, Volcker commenting about the scope of the regulations, said: “The impact beyond the USA will be minimal, and to the extent it exists is likely to be constructive.”

“Proprietary trading indirectly leads to conflicts of interest with bank customers, patterns of compensation and organisational culture out of keeping with traditional banking. Commercial banks provide services essential to the economy - maintaining its payments system, lending particularly to small and medium-sized businesses, and providing a safe depositary for liquid funds,” he added.

“Those banks are supported by access to the central bank, deposit insurance, and other assistance in time of need. That government (aid) amounts to an indirect subsidy by taxpayers. That subsidy should not be extended to proprietary (ie speculative) trading,” Volcker said.

He continued saying Abu Dhabi and the GCC should be supportive of the efforts to reform the financial system that so sadly broke down after the boom years of the 1990's and early 2000. “The Arab nations can contribute to those efforts through membership in the IMF and other key international institutions, including financial support when required.”

Mahmood Al Aradi, senior general manager, NBAD, financial markets division, said: “Certainly, Volcker’s insights into market factors, economic models and philosophy on recovery would be invaluable. The fact that he would be in Abu Dhabi to address a matter of high concern to financial services industry confirms the significance of the Global Financial Markets Forum.”

Volcker served in the Federal Government for nearly three decades and under five presidents including John F Kennedy, Lyndon B Johnson, Richard M Nixon, Jimmy Carter and Ronald Reagan, the statement said.

In 1979, he was nominated by former President Jimmy Carter to fill the most powerful economic seat in government - chairman of the Federal Reserve Board. As chairman, he also had oversight of the 12-member Federal Open Market Committee (FOMC), which decides the conduct of US monetary policy.

He instituted tough economic policies that halted the runaway inflation staggering the American economy in the late 1970s and early 80s, and ushered in an era of financial deregulation and innovation, it said.

From 2009 to 2011, Volcker was an economic advisor to President Barack Obama, leading the President's economic recovery advisory board.

On January 2010, President Obama proposed bank regulations which he dubbed "The Volcker Rule", in reference to Volcker's aggressive pursuit of tougher financial regulations.

The proposed rules would prevent commercial banks from owning and investing in hedge funds and private equity, and limit the trading they do for their own accounts, it said.

Last year’s event attracted 700 delegates from across many countries, including notable speakers like Dr Nassim Nicholas Taleb, the author of “The Black Swan”; and author, academic and economic commentator, Jim Rogers. – TradeArabia News Service