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Carney warns banks to clean up their act
4:22pm Wednesday 28th May 2014 in Business News
BANKERS should think less about personal gain and more about the health of the economy, Bank of England Governor Mark Carney said, as he called on bankers to radically improve their behaviour.
In a forthright speech, Mr Carney said recent scandals in currency and commodity markets highlight “a malaise in corners of finance that must be remedied,” saying such “corruption” has hurt trust in modern capitalism.
Speaking at a conference on the future of capitalism, the Governor said financiers should be custodians of their institutions.
He added that a "reductionist view of the human condition" had prevailed in the run-up to the financial crisis.
Mr Carney also emphasised the need to tackle growing global inequality and for bankers to work harder at rebuilding public trust.
"Just as any revolution eats its children, unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself," he said. "A sense of self must be accompanied by a sense of the systemic."
The governor said board members and senior management at banks should clearly define the purpose of their organisation and promote a culture of ethical business.
He said this would help to support their long-term prosperity.
"Financial capitalism is not an end in itself, but a means to promote investment, innovation, growth and prosperity," Mr Carney said.
He added that the financial crisis had widened the gap between bankers and the true purpose of their work.
"In the run-up to the crisis, banking became about banks not businesses; transactions not relations; counterparties not clients." he said.
Mr Carney said current financial reforms, including those aimed at ending the existence of too-big-to-fail firms, banks whose collapse would cause such a big knock-on effect on the wider economy that governments had no choice but to rescue them, would help rebuild trust in the system.
"This is the year to complete that job," he said.
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