Tre Professori on banking

Yesterday we were told that all banks are about to go bust and that thus they must all be nationalised.

Today the Bank of England, who actually know about such things, tells us that:

The Bank’s financial policy committee, which assesses risks to the financial system, carried out analysis of what would happen to banks and building societies if GDP fell by 30 per cent in the second quarter compared to the final three months of 2019 and by 14 per cent this year. Lenders would suffer from about £80 billion in losses, but that would be well below the £120 billion of losses they demonstrated that they could withstand under the Bank’s 2019 stress test of the sector.

Who to believe, eh, who to believe?

5 thoughts on “Tre Professori on banking”

  1. To be fair I don’t believe central banks ‘stress tests’ either. Central banks have a vested interest in saying everything is just peachy, even when it isn’t, because the only thing holding a fractional reserve banking system together is confidence. So no central bank is ever going to admit all the banks under its control are f*cked , even if they are, because saying that immediately makes it so.

  2. The Meissen Bison

    I don’t expect that the BoE will have envisaged the Elynomic consequences of the banks having to shell out for everything because no stress test allows for wholesale plunder of the banking system. Similarly, they may not have considered policy options which are motivated by irrational hatred rather than good sense.

    Argentina is about to go phut (again) – I wonder if the Argies do ermine – and might appreciate a hand with their next bond issue.

  3. Dennis, Legend of the Parish

    The real question isn’t who to believe, it’s whether there is evidence to support nationalizing Britain’s banks. At this time there doesn’t appear to be any.

  4. With savings guaranteed up to about £80,000,not to mention Too Big to Fail, do we not have something approaching a nationalised banking system?

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