Should worldwide banks refrain from taking risk?
While this may seem something of a bizarre question, if you trace the development of the worldwide banking arena you will soon notice that many financial instruments have been created over the last 100 years. Each one of these instruments has carried some degree of risk to those parties involved in trading and creating such services so if we block the banking sector from taking further risk in the future do we risk stunting growth and development?
There is no doubt that initiatives within the worldwide banking sector have created a very different environment to the one seen 100 years ago. We have traded options, debt instruments, sliced and diced bonds and an array of other financial instruments which many of us will never come across and never fully understand. However, many of these new instruments play an integral part in the overall worldwide financial system and while there are risks to any such developments there are certainly benefit in the long run when successful.
There is the danger of "throwing the baby out with the bathwater" and there needs to be a balance between increased regulatory power and the ability of financial mavericks and financial entrepreneurs to introduce new and useful financial instruments.
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