You can’t sleep on the mattress and put it to work too!

Sir Sir Samuel Brittan in “How to put money in the bank” discusses the very important aspect of banks being able to pay back the deposits when so asked. But a bank is not awarded its franchise only to serve as a mattress but also because it is supposed to help generate job creating growth and distribute the opportunities to those capable of doing the most with the funds deposited.

Missed in the current debate is the fact that bank regulators have over the last two decades imposed through their minimum capital requirements a quite severe regulatory arbitrated bias against what is perceived as risk; and which has altered the flow of funds away from entrepreneurs into consumer financing; and which has clearly affected development as such; and unfortunately now it seems that all of these sacrifices have come to naught, when we are discovering that risks never left town but just went into hiding.

When now the banking regulators might be tempted to dig even further in the hole they find themselves in, let us hope they remember to put a cap on the amount of sacrifices a society can afford to do just in order to get itself a safe financial mattress where to put the retail deposits.