THE FINANCIAL system can be very short-sighted, forgetting lessons learned in crises and so failing to improve stability and wealth in the long-term, top regulator Andy Haldane said last night.
The senior Bank of England official argued that institutions are vital to hardwiring these lessons into the system, to keep the economy moving in the long-run and prevent recurring problems.
And as the world’s economies and financial systems become steadily more integrated, he believes the problem is even more important – because all financial systems can move in unison, forget lessons at the same time and so become ever more vulnerable.
He also said that the Bank should be prepared to step in if parts of the financial system start to overheat. “The macro-prudential actions of the FPC will not always be popular,” Haldane said.
“But financial policy is not a popularity contest... Party-pooping accusations have come thick and fast through this crisis, some faster and thicker than others.”