FSA Chairman Adair Turner's lecture was focused on the following issues:

• Radicalism in pursuit of financial stability. Have the technicians of financial regulation been radical enough in the reform of capital and liquidity? Have we significantly reduced the probability and severity of future financial crisis?

• Second, issues relating to financial intensity, the social value of financial activity and inequality. Have we thought deeply enough about why finance has grown so large relative to the real economy, why pay in finance is so high, whether this is a problem, and if so whether we can do anything about it?

• Third, radical challenges to dominant economic theory. Was this crisis, as some have argued, a crisis not just of specific institutions and regulations, nor even just a crisis of markets in general, but also of an entire economic theory? And if so, has that theory been appropriately de-throned?

• Those three dimensions may seem somewhat disparate. The first is technical; the second raises wider social issues; the third, issues of theory. But there is a linking theme, which is the need to look at the total system and the macro-effects, recognising the deep roots of instability and excessive financial activity, and avoiding the delusion that if we can only fix a few specific incentive and market discipline problems, all the problems will disappear.

 

Full speech