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Morgan Stanley CEO delivers Keith Murdoch Oration: Addresses current instability in the banking sector globally and discusses Australia’s complex relationships with key allies and trading partners

Media release

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Wednesday 05 April 2023

Chairman and CEO of Morgan Stanley, James Gorman, used his address at the 2023 Keith Murdoch Oration at State Library Victoria in Melbourne, entitled ‘What happened to the concept ‘You can bank on it?’’, to contrast the current instability in banking to the global financial crisis of 2008, indicating that the current crisis is a liquidity crisis, while 2008 was a credit crisis. But while pointing out the differences, he also discussed the relationship between the crises and drew conclusions as to how banks can be regulated and managed to avoid such crises in the future.

Gorman sees bank runs and government intervention in the banking sector as a fact of life, because “you can’t regulate away fear” – the underlying cause of bank runs. But he believes that regulatory action can keep a cap on the underlying causes of that fear: “Force banks to operate with small sandboxes, vigilant oversight, aligned compensation policies, strong boards, stable CEOs, intentional succession planning, rigorous annual stress tests and capable supervision. Even with that, some individual banks may fail but it is much less likely to be systemic.”

Gorman also used his address to discuss the difficult situation Australia faces as a key ally of the US and a key trading partner of China during a time of strained US/China relations. He told leaders and philanthropists gathered in the library’s historic Cowen Gallery that “Trade is China’s umbilical cord” and that as a nation with an export-driven economy, “China needs access to the world.”

As a key ally of the US and the UK, “Australia is in a complex place, as the national debate exposes,” Gorman said. “Australia needs China to consume its iron ore, coal, and other products … currently somewhere between 30% – 40% of Australia’s exports are to China.

“Australia can and should forge alliances, respect its neighbours, and treat all countries as relationships to be developed but not coopted. An alliance with the US and the UK does not violate that objective, nor does trade with China. We should look forward to many decades of US/China/Australia trade and understand the inevitable issues that will be part of that journey,” he continued.

Despite addressing these complex issues in his oration, the Melbourne-born banker describes himself as an ‘eternal optimist’, and reminded his audience that, despite the flux of current times, the world in 2023 is in a “place of relative stability, prosperity, innovation and hope.”

President of the Library Board of Victoria, Christine Christian, welcomed the bold and brave address – believing it encapsulated the traditions of the Keith Murdoch Oration, which has seen global leaders from media, politics, science, sport and humanitarianism share their wisdom and perspectives on some of the crucial issues of our time.

Ms Christian, said, “It is in times of challenge when leadership is of its greatest value. We are honoured to have James Gorman, who is at the pinnacle of global financial services, give his insights into what is undoubtably one of the key issues of the moment: that of strategies to ensure the strength and stability of the global banking system.”

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About the Keith Murdoch Oration

Established in 2001, the Keith Murdoch Oration honours the contribution of State Library Victoria Trustee and President Sir Keith Murdoch and raises funds to support the ongoing work of the Library.

Since 2001, the Keith Murdoch Oration has been delivered by:

·       Rupert Murdoch (inaugural oration), Chairman and CEO of News Corporation.

·       Professor Peter Doherty, Nobel Prize-winning Laureate.

·       Lord Sebastian Coe, Olympic sportsman and politician.

·       Hugh Evans, Humanitarian and co-founder of the Oaktree Foundation and Global Poverty Project.

·       The Honourable Paul Keating, Former Prime Minister.

·       Noel Pearson, Founder of the Cape York Partnership and Co-Chair of Good to Great Schools Australia.

·       Robert Thomson, Chief Executive of News Corporation.

About James Gorman AO

James Gorman is Chairman and CEO of Morgan Stanley. Mr. Gorman became CEO in January 2010 and Chairman in January 2012. He joined the firm in February 2006 and was named Co-President in December 2007. Before joining Morgan Stanley, Mr. Gorman held a succession of executive positions at Merrill Lynch. Prior to this, he was a senior partner of McKinsey & Co. and began his career as an attorney in Melbourne.

Among his civic activities, Mr. Gorman serves as a Director of the Council on Foreign Relations, and Chair of the Board of Overseers of the Columbia Business School, and is a member of the Financial Services Forum, Business Council and the Business Roundtable. He formerly served as a Director of the Federal Reserve Bank of New York, President of the Federal Advisory Council to the U.S. Federal Reserve Board, Co-Chairman of the Partnership for New York City, Chairman of the Board of the Securities Industry and Financial Markets Association and Co-Chairman of the Business Committee of the Metropolitan Museum of Art.

Mr. Gorman, who was born in Australia, earned a B.A. and Law degree from the University of Melbourne and an M.B.A. from Columbia University.

About State Library

State Library Victoria is Australia’s oldest public library, and one of the first free public libraries in the world. We believe in the power of knowledge to change lives. Free to access and open to all, the Library enriches the cultural, educational, social and economic lives of all Victorians. State Library Victoria preserves and shares the stories of Victoria and the world, and is a major destination for stimulating cultural experiences, contemporary debates and community-driven collecting. We encourage learning, exploration, imagination and creativity, opening up possibilities for all Victorians.