It is “totally understandable” that the public is still angry at about bailing out banks in 2008 and not enough time has passed for the more stringent banking regulation to be relaxed, Chancellor George Osborne said at the Bank’s open forum conference.
Bank of England Governor Mark Carney said much the same in a television interview.
“Neither I nor my successors will be ‘hugging a banker’. Ultimately we want to get to a point where people can respect bankers and bankers can respect themselves and recognise their job is fully serving the economy,” he said.
Mr Osborne and Mr Carney were both attending the conference examining whether enough has been done to rein in reckless behaviour by banks that have been fined hundreds of millions of pounds for trying to rig the Libor interest rate benchmark and currency markets.
“The idea that just a couple of years on you can go ‘you can forget about all of that’ and move on, is, I think, a bit optimistic. It is going to take time,” Mr Osborne said.
He added that traders should look at the big fines levied on the banks for misconduct and ask themselves whether the “extra buck on the trading floor” was worth it.
Speaking at the conference, Mr Carney said a welter of new rules have made banks more resilient to shocks and unlikely to need a taxpayer bailout again in future.
But he sought to answer criticism from banks that new rules were rushed through, creating unnecessary complexity that is making lending to companies too burdensome.
“Given the complexity and scale of financial reform, it would be remarkable if every measure were perfectly constructed. Or if they all fit seamlessly into a totally coherent, self reinforcing whole,” Mr Carney said.
“Authorities must have the courage to listen, the honesty to admit our mistakes and the confidence to set them right.”
Governments and regulators are keen for the banking sector to move on from the crisis and turn their focus away from replenishing capital to helping the economy grow.
Mr Carney said Britain’s financial sector had the potential to be worth six to nearly 15 times the value of the UK entire gross domestic product (GDP) by 2050.
Mr Osborne wants Britain to become the top global centre for financial technology and said he was making sure regulators are provided space for this and digital currencies to innovate.
Earlier yesterday the chairman of Barclays, John McFarlane, who heads industry lobby group TheCityUK, said a new tax on banks posed a long-term threat to Britain’s attractiveness to the financial sector.
However Mr Osborne said Britain still faced the dilemma of how to grow a vibrant financial services sector while ensuring that taxpayers were off the hook.
In a first for the Bank, it threw open the whole issue of financial market regulation to the public for their ideas on how to take it forward.
Describing the purpose of the forum, Andy Haldane, chief economist at the Bank and a Yorkshireman, said: “We think of financial markets as being big, scary and complicated and indeed they are all of those things, but they also really matter.
“They matter if you are a company, big or small, or a household, or when you are saving, when you are borrowing, when you are buying goods from the shops, when you are going on holiday, when you are sending goods abroad, when you are importing goods from abroad.
“To everyone in society, financial markets really matter.”
Around 400 people attended the forum at The Guildhall in London, with around half securing their places through a public ballot. But Mr Carney said the places were four times oversubscribed.
Many more watched the event broadcast live online, including some of the 5,000 pupils from 300 schools across the UK who watched a webinar from the Bank earlier this week.