£260,000 to save financial markets as we know them
Financial markets are broken, dominated by a small clique of corrupt bankers who have subverted the whole meaning of capitalism for their own ends, Bank of England governor Mark Carney indicated this afternoon.
The solution: a new Bank of England deputy governor to reform the way the Bank interacts with markets, make sure key benchmarks like Libor and FX fixings are used for good, and consider new regulations to keep traders in line.
The current three deputy governors receive salaries of around £260,000, not a bad deal for a new deputy who is charged with stopping future scandals.
“What we saw in Libor and what the FCA is investigating in the FX markets around fixes, are symptomatic of a group of individuals in markets who have lost sight of what a real market is, and that is unacceptable,” Carney told MPs on the Treasury Select Committee.
“Part of the way we ensure the Bank has its rightful place is to help lead the effort to rebalance these markets.”
The governor stressed that making real capitalism work is not just about defending banks but about their customers too, up and down the country.
“The market system is the best way to achieve allocative and dynamic efficiency, but it has to be a real market – not just that there is no market abuse, but that there is fair access to the market and that if you’re acting on behalf of a client that you’re giving them the best terms, equivalent to those you would get yourself,” he said.
And as well as protecting the rest of us, Carney added that these reforms are vital to the future of the Bank of England, too.
“This institution has to be beyond reproach, we have to have the highest standards of integrity,” he told MPs.
“We have to ensure we ruthlessly, relentlessly follow through with this investigation of what happened, that we explain very clearly why, if there were failings, those occurred, and ensure that these do not happen again.”