Dr. Oliver Wünsch – On Transformation Processes, the Role of Mobility in Relation to Real Estate Values and the Relationship of Course Changes of Money and when Sailing

Dr Oliver Wünsch is a partner at Oliver Wyman and an expert in crisis management. Among other things, he worked for the International Monetary Fund in Washington and was in charge of the restructuring of the Cypriot financial crisis as well as heading the strategy department of Finma. Dr. Wünsch’s expertise includes managing transformation programmes in various Euro crisis countries. He is intensively involved with the interrelationships of financial markets, politics and economics as well as with current developments in the financial sector. Dr. Wünsch has also been a lecturer at the Faculty of Economics at the University of Zurich. In his free time, he prefers to sail with his boat on the sea and steers every change of course by hand, whether due to the weather or due to his own choice.

What does transformation mean to you?

For me, transformation is synonymous with striving for balance, changing circumstances, be they technological, political or personal. Structures have to adapt to the new circumstances or they are destroyed. That is transformation and per se neither bad nor dangerous. Unfortunately, transformation, even when done thoughtfully, produces not only winners but also losers. These losses are real and cannot simply be dismissed as unjustified fears. Otherwise, division and strife will result. Especially with the transformations that are emerging at the societal level – such as climate change, globalisation. but also driven by the Covid crisis – we have to be careful not to divide society and thus our common knowledge. Unfortunately, this realisation has not yet dawned on either side of the political spectrum.

Fintech expert Chris Skinner writes: “Money was originally a control mechanism for ancient Sumerian governments to control farmers based on shared beliefs.”1 What do you think is the role of money in today’s world and what do you see as the future of money, especially in the context of increasing digitalisation?

In his book ‘Debt – The first 5000 years’, the anthropologist David Graeber, who unfortunately died recently, explained very well that money was not ‘invented’ as an instrument of exchange, but rather as a means of measuring and later settling debts – at that time especially to rulers who wanted to finance expensive wars and a partly sprawling state system. Whether the debtors really shared the relevant convictions may be doubted… By allowing the rulers – e.g. through taxation – to create claims or debts, the debtors were compelled to realise the interests of the rulers or at least to finance them. Then as now, the state achieved this through two instruments: i) sovereignty over the definition of a legal tender and ii) the monopoly over the issuance of the same. Increasing digitalisation will continue to push back the role of physical cash for the foreseeable future. The question, however, is whether non-state digital currencies will become more widely accepted. Unlike today’s fiat money, which the state or its central bank can theoretically issue without limit and where it can legally defend its monopoly, many digital currencies do not need the state at all. The money supply is mathematically provably limited (analogous to gold, which only occurs in limited quantities in the world). This is one of the reasons why states react so allergic to cryptocurrencies. However, it is too early to make predictions here.

In your opinion, is there a connection between the mobility of people and the financial valuation of real estate?

Mobility (freedom) and real estate (immovable property) seem to contradict each other at first glance. Conversely, however, real estate in areas where people want to live for private and business reasons are probably the only assets that retain their value in the long term. In this respect, I think the statement that owning real estate is a burden and living as a tenant is so much happier is, in the end, a cop-out by those who don’t want to or can’t commit. Moreover, for the majority of mobile people, rent is one of the biggest items in the budget. Whether you are really that much more free if you let landlords dictate your living conditions is more than questionable, especially in regions affected by gentrification.

People often talk about the power of money. What do you think is needed to achieve a better distribution of power and money in the world? Is it a question of money at all or rather one of human values?

I have learned from my work in developed and developing countries that the vast majority of the political spectrum accepts unequal distribution of wealth and income as long as wealth and income have been achieved legitimately and the unequal distribution does not lead to whole strata of society being left behind. Since 2000, global wealth has tripled and much of this increase is due to the rise in the value of land. In my opinion, this will become one of the biggest social problems of the next decades. We should not ignore the majorities that initiatives to redistribute real estate are increasingly finding today.

What motivates you to work so much, intensively and purposefully on the management of international financial crises?

Like many Zurich economics students, I started my career at a big bank. However, large organisations are not my thing. That’s how I came to my current field of activity: ‘Public Finance and Monetary Policy’. What motivates me above all is how you can achieve a lot with a small team and thus (if you are on the right side) achieve something good for many people.

What excites you about sailing?

Nature, freedom, autonomy.

Do you see similarities in the basic principles of changing course in sailing and in dealing with money, for example in stock market trading?

In sailing you learn at the very beginning: never go against nature, i.e. wind and current. One might think that this could also be transferred to the financial markets. Interestingly, most investors who have achieved high excess returns in recent years have not adhered to this principle. Today, in the more mature markets, financial markets are dominated by central banks, so the old set of rules may no longer apply.

Read an article by Dr. Oliver Wünsch

Skinner, Chris: Digital Human. The fourth revolution of humanity includes everyone. Wiley. London 2018, p.26