Some interesting remarks from the RBA Deputy Governor the other day:
I think the other comment I’d make, is really in response to Steve, there is really a loss of trust in financial institutions around the world and you can understand why
the political process, why the people in countries around the world want someone
to do something about that, because financial institutions have managed things
so poorly. So kind of at a community level one can understand why our societies
want someone to do something about this because the previous set of arrangements didn’t work out well.
The issue that I see – one of the issues I see at the moment is that banking systems globally are not doing enough to rebuild that bond of trust with the public and the problems with Barclays are just another illustration of that. So if the banking system wants regulatory pressure to ease off a bit, and it wants the political pressures to ease off a bit and it wants the pressure from the community to ease off a bit, they need to do more to rebuild this bond of trust. So financial intermediation is about trust and the banks have – there’s been a lot of brand damage and I don’t see much going on at the moment that’s effectively rebuilding that bond of trust. And while ever that doesn’t exist our societies will, I think quite rightly, demand that our politicians and our regulators do something about that. I think the banks need to do more as well, rather than just saying well you know regulation isn’t the solution here.
