LONDON (Reuters) - Bankers should think less about personal gain and more about the health of the rest of the economy, Bank of England Governor Mark Carney said on Tuesday.
Speaking at a conference on ‘inclusive capitalism’ organised by the City of London - which was also addressed by former U.S. President Bill Clinton and Britain’s Prince Charles - Carney said bankers needed to rebuild public trust.
“Just as any revolution eats its children, unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself,” he said. “A sense of self must be accompanied by a sense of the systemic.”
Carney’s tone differed somewhat from that in one of his first speeches after becoming governor, when he said the BoE was “open for business” - a contrast to his predecessor Mervyn King’s often guarded attitude to banks.
Christine Lagarde, the managing director of the International Monetary Fund, said earlier at the conference that progress in completing banking reforms was being hampered by fierce industry lobbying.
Carney said public trust had been damaged by the behaviour of banks both before and after the financial crisis. He cited allegations that the Libor interest rate benchmarks and prices on the foreign exchange market were tampered with.
“Unbridled faith in financial markets prior to the crisis and the recent demonstrations of corruption ... has eroded social capital,” he warned. “An unstable dynamic of declining trust in the financial system and growing exclusivity of capitalism threatens.”
The Financial Stability Board, an international body chaired by Carney, is due to publish a report shortly on how to reform the process, which currently relies on banks submitting honest estimates of representative prices.
Carney said wide-ranging improvements would be needed, in his first hint at what the report might contain.
“In the Bank of England’s view, changes to both the hard and soft infrastructure of markets will be required,” he said.
“Consideration should also be given to increasing pre- and post-trade transparency in a host of fixed-income markets, and accelerating the G20 pledge to move the trading of all standardised derivatives onto electronic exchanges,” he added.
Editing by Larry King