The position paper prepared by Michael Webster introducing the Problems of the Banking System for our Study Group meeting of 16th March, 2010 on Financial Regulation has been posted under Pages/Study Groups/Banking system problems on the right.
The position paper prepared by Michael Webster introducing the Problems of the Banking System for our Study Group meeting of 16th March, 2010 on Financial Regulation has been posted under Pages/Study Groups/Banking system problems on the right.
Addressing the questions raised in the position paper, participants recognised the importance of the City of London to the economy but the view was expressed that limiting the compensation of bankers at the higher levels e.g. via the tax system, would not necessarily trigger a mass exit to other financial centres. That said, there is a growing threat to the pre-eminence of London due to the rapidly developing financial influence of e.g. China and India.. The meeting saw the need for tighter regulation but not so much as to nullify the attractiveness of London for financial services. A strong view was expressed by some in support of a single regulator to avoid the pitfalls of the existing tripartite system with the Bank of England historically best placed for this role, as already proposed by the Conservative Party. There was some support for separating ordinary banking from investment activities to improve the overall competitiveness of the market although foreign banks could move in to replace those lost through forced mergers. CDSs were seen as one but not the only contributing factor to the financial woes of Greece, other problems being the possible down-grading of Greek government debt by the rating agencies and the poor state of the public finances. Naked contracts could be better regulated to reduce undue speculation.