Page 35 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

cases the rule has been made from a good place – its intentions were sound – it just never took cognisance of the entire body economic.
I suspect economic history will judge the macro-prudential medicine that was administered to the critical function of money supply and credit extension, to banking, to be bad medicine.
Like all of the symptomatic drugs that we use to smooth over the challenges of everyday life – the cortisones and the pain medication and the muscle relaxants and the anxiolytics – they work well to reduce our discomfort. But this is not a case of the u, it is something far more enduring. By addressing only the symptoms, by never attacking the source of the infection itself, we only delay the inevitable.
And that inevitable outcome will be structural reform. It will not be long before banking faces an existential question. Can banking serve both its macro-economic duties as well as its duties to shareholders? And if so how can it do so pro tably? At the point at which banks nd themselves today, it is becoming increasingly di cult to cross even the double-digit boundary for return on equity. Investors may just do what investors always do, and migrate to better performing and less challenged asset classes. 
“It will not be long before banking faces an existential question. Can banking serve both its macro- economic duties as well as its duties to shareholders?”
BAd medIcINe ANd the Body ecoNomIc
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