Europe, why should chief executives of businesses with cash on hand take risks when banks are officially paid not to?

Sir, Sarah Gordon quotes Chris Gentle with: “Who is owning the growth agenda? It should be chief executives, but they have not been rewarded recently for taking risks. The danger is that Europe will lose competitiveness in the long term?”, “Europe shuns growth in favour of ‘safety first’” September 15.

What’s strange about that? Why on earth should chief executives of businesses with cash surpluses invest and take risks when banks, those who should be the forefront in financial intermediation, are officially ordered not to take risks.

Europe, for some decades now, has actually paid its bankers to avoid risks, by allowing them to earn much higher risk adjusted returns on equity on exposures officially deemed as safe like to infallible sovereigns, the housing sector and the AAAristocracy than on assets deemed as “risky”. And of course that stalls any economy.