Monday, June 28, 2010
Britain’s banks will have to permanently bolster their balance sheets by as much as £130bn – equival
UK banks told to boost funds by £130bn
The heads of state and finance ministers at the Toronto G20 summit agreed that in future banks should keep enough capital on their balance sheet to have withstood the aftermath of Lehman Brothers' collapse in 2008. The ruling, endorsed by the Chancellor, George Osborne, is likely to have profound consequences for banks both in the UK and overseas.
Posted by mark @ 10:53 AM (1097 views)
6 thoughts on “Britain’s banks will have to permanently bolster their balance sheets by as much as £130bn – equival”
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Crunchy says:
LOL More money grabbing from your pockets.
Toronto police having zero tolerance when it comes to independant reporters and ‘independant’ (non agent) protesters come to that.
I wonder why?
Canada was such a lovely place as well. ‘Can you see what it is yet?’
dbc reed says:
No doubt a bit a shaker for all those who believe that banks are just middlemen between borrowers and savers.Coco the Clown the banks’ spokesperson whines that every quid tied up in bank capital means fifteen not available to lend out. Really?And Ezra Pound got stuck in a cage at Pisa for saying something similar about the magic money creating multiplier (admittedly his case was a tad complicated by his making incomprehensible broadcasts on the subject from Mussolini’s war-time radio station) .
mark wadsworth says:
DBC, banks ARE just middlemen. You could argue that they are middlement between reckless borrowers and reckless depositors, but they are only middlemen after all.
The point about the £130 billion capital is that banks are no longer bearing any risks – all the risks are born by the reckless depositors and not the shareholders of the banks.
As to the concept that “£1 extra in share capital is £1 less to lend” this is of course piffle. The £1 share capital is on the “money in” side of the balance sheet and the £1 they lend is on the “money out” side.
Coco might as well argue that if I have to earn an extra £1 income then I can spend £1 less.
dbc reed says:
Mark is mesmerised by the fact that banks’ accounts show an exact balance between monies in/out.This balance is not surprising because when the banks agree to make a loan via a cheque or electronic process unbacked by any “reserves”, they open two accounts one current (unless you already have one): the other a loan account.One is paid into the other until they both dematerialise.”What the bank does is in effect a conjouring trick.
…. First it creates the money loaned out of thin air,then it charges interest on it.In public the financial services industry maintains that banks are merely humble intermediaries between one customer who has surplus funds and another customer who desires to borrow.Interest is charged to recompense the lender.But if the money is created from thin air ,there is nobody to reward.In reality ,the vast share of the reward goes to the bank itself.”
The Green New Deal Group “The Cuts Won’t Work” section 4 box 3 p23
Jim Green says:
DBC reed:
that is exactly why the BoE should take charge of issue of national money supply. Debt and interest free credit could be created and spent into the economy by the BoE, rather than borrowing from private institutions who then effectively control you (so much for democracy).
dbc reed says:
Jim Green
Entirely agree.