Highlights the importance of financial sector to UK economy alongside risks posed to society. While some risk-taking is inherent in financial sector operations, recent crisis shows high cost to taxpayers when risk-taking becomes excessive.
On 10 December 2009 HM Treasury published a discussion document on possible international options to reduce the cost to taxpayers of financial sector failures. Risk, reward and responsibility: the financial sector and society is a contribution to the international debate on the future of the global financial sector.
The paper highlights the importance of the financial sector to the UK economy alongside the risks it poses to society. Whilst some risk-taking is inherent in financial sector operations, the recent crisis has shown the high cost to taxpayers when risk-taking becomes excessive. Risk, reward and responsibility: the financial sector and society considers ways in which the financial sector might contribute to the potential costs of any residual risks it poses to taxpayers and to broader social objectives.
A strong and competitive financial sector is essential to a productive modern economy and financial services make a significant contribution to the UK economy in particular. Banks and other financial institutions play a key role supplying businesses, large and small, with the financing necessary to maintain growth and productivity. The financial sector also provides consumers with ways of managing their finances over their lifetime and generates broader benefits to the economy. But as we have seen, when banks fail it can have a high cost.
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