Jean-Jacques Rommes, ABBL CEO, said: "Today it has become pretty much an accepted truth that banks are guilty and that they should pay. Yet very few people actually lose much sleep thinking about what it is that banks are supposed to be guilty of and why they should pay."
There are many people, including politicians, who, without batting an eye, say that banks have caused or accelerated the euro crisis by speculating on sovereign debt. And because banks now need new capital to get through the crisis, it would be perverse if taxpayers were once again left footing the bill.
The truth, however, is that banks have done their job in lending money to States. Existing legislation and governments massively encouraged banks to buy State debt, which was considered to be a virtually risk-free investment. Importantly, States – but not only States – still absolutely need banks to continue to finance them.
We are thus not dealing with a banking crisis, but a sovereign debt crisis of States that have over-indebted themselves and can no longer pay back their creditors. States are thus not rescuing banks, but themselves.
Because of this perceived lack of transparency, people call for more ethical behaviour by banks. This is all well and good, but it is a false claim to ask ethical behaviour of others, if one does not have to assume responsibility oneself.
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© ABBL - Luxembourg Bankers’ Association
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