Has the UK banking industry changed forever?
The UK banking industry has been demonised over the last few months as the UK government and various regulatory authorities continue to attack the sector. The truth is that the UK banking industry is central to the UK economy and is the oil which allows the wheels of the UK economy to turn, consumers to lend money and businesses to finance their operations. There is so much pressure on the banking industry in the short term that it is inevitable we will see significant changes although slowly but surely there is every chance the sector will return to its "former glories".
This week we will see Gordon Brown issue a number of new initiatives aimed at the banking sector and transferring some power back to consumers and businesses. Whether this will be enough to appease voters in the short to medium term, as we approach the next general election, is debatable but the truth is the government needs to be seen to be doing something positive to rein in the power of the banks.
However, ultimately with the worldwide economic dependence upon the banking system and the money markets still visible, this transfer of power is almost certain to be reversed in exchange for increase liquidity and more competition in the long term. It is difficult to find a balance between overregulation and overdependence, but this is something which the UK government and worldwide governments need to address sooner rather than later.
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