It's not our job to design financial systems, says FSA
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Lord Adair Turner, chairman of The Financial Services Authority, says is not the regulator’s responsibility to design an effective financial system for the future.
Speaking to delegates at the Confederation of British Industry’s annual conference today, Turner argues that the debate about the economic value of the financial system should not focus solely on what went wrong previously, but also the vital functions such as linking savers to productive investments.
He says the crucial issue is “whether we have a financial system well equipped to serve all the needs of a
vibrant economy.”
Turner posed the question of whether the UK relies too much on bank finance and suffers from an inadequately developed securitised credit market, an issue recently raised by Monetary Policy Committee member Adam Posen.
He also questioned whether it was welcome that 50% of bank lending to non-financial corporations goes to real estate companies.
Turner says: “I don’t know the answers to these questions, and indeed answers to these questions lie beyond the remit of the FSA - our task has to be to ensure financial stability and fair treatment to customers, not to
design an optimal financial system.”
He adds: “The aftermath of the crisis has shown that we cannot just assume that the financial system will automatically and always serve the best interest of the real economy.”
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