Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
IMF Survey: Fresh Approach Needed in Banking System
April 14, 2009
“The banking system, over 50 years, has built up its empire shielded from meaningful supervision by government authorities.” (photo: Newscom)
GLOBAL FINANCIAL CRISIS
Dear IMF Survey:
As we have recently seen, one economic sector cries out for comprehensive reorganization. I am referring to the banking system which, over 50 years, has built up its empire shielded from meaningful supervision by government authorities and policymakers.
The advent of consumer credit and its scandalous abuses, the chaos in financing for housing, support for private enterprise, and the organization of payments (forward settlements) are just some of the issues that call for innovative thinking—preferably by experts drawn from outside the system.
All economic stakeholders are awaiting the emergence of a new organizational framework for a sector that (it is becoming increasingly clear) has been at the root of the present state of affairs. And yet banks have grown powerful, conservative, and unethical.
Who, then, is best placed to shoulder these responsibilities, which call for a truly fresh approach? The IMF should spearhead the implementation of a new compact between the world of finance and the real economy.
Robert Regard
Paris, France