Financial TimesFinancial Times

Four ways to fix the bank problem

By Martin Wolf

21 Mar 2023 · 4 min read

Editor's Note

"Banking stands revealed as a part of the state masquerading as part of the private sector." The FT's Martin Wolf argues banks should be regulated like utilities and recommends radical overhauls.

Banks are designed to fail. And so they do. Governments want them to be both safe places for the public to keep their money and profit-seeking takers of risk. They are at one and the same time regulated utilities and risk-taking enterprises. The incentives for management incline them towards risk-taking, just as the incentives for states incline them towards saving the utility when risk-taking blows it up. The result is costly instability.

If one thing is clear about the events of the last two weeks, it is that the vaunted reforms introduced after the global financial crisis have not changed any of this that much, or at least not enough.

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