It’s time to privatise commercial risk in banking and insist on prudent accounts. Government should: Eliminate moral hazard from the financial system by implementing this measure to make bank directors strictly liable without limit and to treat as capital both directors’ personal bonds and, for five years, the bonus pool. Introduce prudent bank accounting so banks can’t game the rules using derivatives to manufacture illusory profits from unrealised cash flows. The banking system isn’t capitalist It’s not capitalism when private individuals […]

Tags: Accounting, Banking, Derivatives, economics, Financial Institutions (Reform) Bill, Financial Services (Regulation of Derivatives) Bill, IFRS, Moral Hazard, Responsibility