Abstract

The global economy has recovered from the credit crunch of 2008, but the medicine prescribed by central bankers has left us with excessive debts and growing inequality. Proponents of tighter regulation remain fearful that initial intentions will be watered down, leaving the door open to speculative excesses and further market turmoil. Ten years on from the last crisis, our prospects do not look particularly promising. In my short talk, I shall describe two principles of sound banking practice, developed in the late nineteenth century, that helped to stabilise London’s money and credit markets. These principles informed a range of market practices that limited aggressive forms of funding and discouraged speculative lending. A tendency to downplay the importance of these regulatory practices encouraged a degree of complacency about their removal in the 1970s and 1980s. I shall argue that these principles need to be reapplied if the vulnerability of credit markets is to be addressed.