Opinion and Editorial from the Policy Exchange team.
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Five years after the fall of Lehman Brothers, James Barty writes that efforts to reform finance have not been a success. He argues that while the financial system has undoubtably been strengthened since the collapse, it has come with a price, exceptionally weak credit growth.
Following the launch of the new TSB bank, James Barty, Policy Exchange’s Senior Consultant for Financial Policy, writes that the arrival of new competition combined with the Funding for Lending scheme should bolster the supply of credit. However, both the chancellor and the governor of the Bank of England, Mark Carney, will need to allow banks more room to do so by loosening regulations on the amount of liquidity banks are forced to hold so they can then replace liquid but non-productive assets like gilts with new loans.
Chris Yiu, Head of Digital Government at Policy Exchange, sets out the main arguments of our recent paper Smaller, Better, Faster, Stronger. By leveraging technology, data and the internet, the government could do more with less, leading to cumulative savings of around £70bn by 2020.
In an open letter to the new governor of the Bank of England, Mark Carney, on his first day in the job, Policy Exchange’s Head of Financial Policy James Barty urges the new governor to replace QE with credit easing and loosen the rules on capital ratios in order to get the banks lending. He also suggests that Carney should employ more senior people with financial markets experience.
James Barty, Senior Consultant for Financial Policy at Policy Exchange, sets out the plans from his report Privatising the Banks for selling off RBS and Lloyds. After examining several options, James sets out a mass share distribution, coupled with sales to institutional and retail investors, as the best option.
James Barty, Policy Exchange’s Senior Consultant for Financial Policy, sets out his plan from report Privatising the Banksfor a mass share distribution of RBS and Lloyds shares to taxpayers.
Chris Yiu, Head of Digital Government at Policy Exchange, urges policymakers to seize upon the recommendations in The Shakespeare Independent Review of Public Sector Information, stressing that the proposals could hugely benefit UK open data policy and promote economic growth.
Simon Less, Policy Exchange’s Senior Consultant on Regulatory Policy, in a joint piece with Regina Finn, Chief Executive of Ofwat, discusses the range of ways sectoral regulators suffer capture. In particular, the article warns about a trend towards political ‘capture’ of, or undue influence over, independent sectoral regulators that appears to forget the reasons why the Thatcher government made sectoral regulators statutorily independent.
James Barty, Policy Exchange’s Senior Consultant for Financial Policy, sets out why the Funding for Lending Scheme is not working, making the argument from his report Capital Requirements that high capital requirements are preventing banks from lending to small businesses. James says the Bank of England must promote credit growth and revert to buying corporate debt directly from the banks.
James Barty, Policy Exchange’s Senior Consultant for Financial Policy, writes in response to the Bank of England’s recent announcement that banks must raise £25 billion extra in capital requirements, arguing that this measure will stop banks lending and prevent economic recovery. James cites findings from recent Policy Exchange report Capital Requirementswhich found bank lending to private companies has fallen since 2008 by £57 billion due to capital requirements being set too high.