''As the new governor of the Bank of England, Mark Carney, takes up his
job, it’s a good moment to reflect on the nature and scale of the work
ahead of him. In the rear-view mirror, he can see how our banks reached
their current condition – a story full of failure, scandal, greed and
incompetence. That, as far as the overall picture of modern Britain is
concerned, is the fun part. The difficult thing is looking forward and
trying to work out what to do next. That’s because in their current
condition our banks are an existential threat to British democracy, a
more serious one than terrorism, either external or internal. As Andrew
Haldane, director of stability at the Bank of England, put it in a
historical overview a few years ago, ‘there is one key difference
between the situation today and that in the Middle Ages. Then, the
biggest risk to the banks was from the sovereign. Today, perhaps the
biggest risk to the sovereign comes from the banks. Causality has
reversed.’ Yes, it has: and the sovereign at risk is us. The reason for
that is that in the UK bank assets are 492 per cent of GDP. In plain
English, our banks are five times bigger than our entire economy.,''
No comments:
Post a Comment