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The ban on short selling from the Financial Services Authority (FSA) has not worked, the Centre for Economic and Business Research (CEBR) has claimed. According to the economists' group, instabili...
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Monday 16th June 2008
The head of markets at the Bank of England, Paul Tucker, has been very busy behind the scenes over the last few months, trying to help avert what has turned into one of the more difficult economic puzzles of recent times. However, Mr Tucker has suggested a new approach for the future, going against the more recent trend of reacting to a crisis after it has happened, rather than trying to change the mentality of the sector and consumers. He has introduced the idea of adding ‘credit cycle circuit breakers’ to the industry as a way of averting a similar situation to the one today.
The ‘credit cycle circuit breakers’ will come into play as commercial lending reaches levels which are dangerous to the economy and the sector. At such times the Bank of England will step in to slow the flow of lending to commercial banks. Such a system goes against the current theory of letting markets find their own levels and then picking up the pieces when things go wrong!
Whether this ‘radical’ approach will ever see the light of day remains to be seen but many are relieved to see that at least some people working inside the Bank of England are at least willing to look at different ways to regulate the money markets. |
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