James Moore: A more stable banking sector does not mean our finances are safe again
Outlook Where's the next financial crisis going to come from? Up until now, regulators have been focused on preventing a repeat of the last one.
That's understandable, and if it leads to a stronger, more conservative banking sector which can stand on its own feet if the global money markets dry up again, fair enough.
The trouble is the next flare-up will almost certainly come from an entirely different direction. Paul Tucker, the outgoing deputy governor of the Bank of England, pointed to a couple of potential hotspots in what amounted to a valedictory appearance before the Treasury Select Committee.
"Shadow banking" – for which read hedge funds and the like – has long worried people, with good reason. The sector is high risk, high reward and perhaps the greatest talent of those working within it might be their unrivalled ability to find ways to evade rules and regulatory scrutiny.
Clearing houses, responsible for ensuring financial transactions are completed if a participant defaults, receive generally less attention. But they could pose just as great a danger. Given their function, just what happens if it is the clearing house that defaults?
That's a thought that gives some of the brighter regulators sleepless nights, and so it should, given the way they have been allowed to operate with comparatively low levels of capital while being sold off to commercial entities whose interests lie in keeping it that way.
But perhaps his best point was that the most recent crisis was the last that will be resolvable across the Atlantic with Asia looking on from the sidelines.
Has regulation over there kept pace with the speed with which financial markets have developed? That's an interesting question.
In certain areas it was actually tighter than what existed in the West prior to the financial crisis. HSBC, for example, has long had to provide details of the salaries of its top earners thanks to its listing in Hong Kong. And the Securities & Futures Commission there was previously run by one Martin Wheatley, who currently heads up the Financial Conduct Authority.
Mr Tucker is quite right to say that the oversight of banks is now a global, and not just a transatlantic issue and that British, European and American banking supervisors need to engage with their colleagues in Asia.
But they should think very carefully before they start telling their opposite numbers in the tigers how they should be doing their jobs given the mess that was made in the transatlantic time zones.
- 1 The black and blue dress: Makers considering a white and gold version
- 2 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 3 What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
- 5 Fearne Cotton quits Radio 1 after ten years for 'family and new adventures'
Boris Nemtsov shot dead: Outspoken Putin critic who had expressed fears for his life is shot dead
Leonard Nimoy dead: Star Trek actor dies after suffering lung disease
PornHub turns masturbation into energy in bid to save the planet
Ukraine crisis: Top Chinese diplomat backs Putin, says West should 'abandon zero-sum mentality'
What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...