A senior policymaker at the Bank of England has said that regulations imposed on the banking sector since the 2008 crisis should not be scaled back in any effort to fuel economic growth.
Sir Jon Cunliffe, deputy governor for financial stability, told a City audience that while banks had a key role to play in fuelling economic growth, this should not come at the expense of increasing risks to financial stability.
Cunliffe said: “The implementation of the detailed reforms will inevitably throw up unforeseen effects in particular places and where it is justified we will need to revisit issues. But we should be careful about talking about turning back the overall regulatory dial or trying to trade off the risk of financial instability for short-term growth.”
Seven years on from the crisis, which resulted in £65bn of taxpayers’ money being pumped into Royal Bank of Scotland and Lloyds banking group, Cunliffe said the costs were still emerging: “The more time elapses since the crisis, the more we learn about its cost, not just in financial terms but in terms of lost economic activity, and perhaps more important, loss of growth potential.
“The financial system can be a powerful engine for growth and prosperity. But its ability to generate systemic crises means it can also be a powerful destroyer of those as well.”
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