Response to Independent Commission on Banking Issues Paper

Response to Independent Commission on Banking Issues Paper
Document type
Corporate author(s)
New Economics Foundation
New Economics Foundation
Date of publication
15 November 2010
The Great Transition
Trends: economic, social and technology trends affecting business
Business and management
Material type

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This is the New Economics Foundation's response to the The Independent Commission on Banking Issues Paper, arguing that banking is unlike other industries and not subject to normal laws of free-market competition. This is because banks perform the fundamental function of credit creation that underpins the health of the whole economy, and as a result they enjoy a unique privilege of implicit and explicit government guarantees of their solvency. The banking system has the potential to undermine the macro-economic management of the economy as well as having a pervasive effect on social and environmental stability. This justifies a broad interpretation of the Commission's terms of reference, and a statement of the function of banking as the point of departure. The New Economics Foundation offers the following definition: 'To facilitate the allocation and deployment of economic resources, both spatially and temporally, to ecological sustainable activities that maximise long-term financial and social returns under conditions of uncertainty'. The Independent Commission on Banking (otherwise known as the Vickers Commission) has been tasked with proposing reform of the banking system in the wake of the financial crisis of 2007-08.

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