"Succinctly and expertly, Whitworth builds a case in which regulatory changes (often initiated as part of a political process) change what a bank is. His argument is very powerful. The reader is treated to an exceptionally well-researched and well-written discourse on key events in British banking history. The scope of the analysis is impressive and leaves no doubt that the task of regulating banks in a competitive international system, while ensuring financial stability in the face of political and geopolitical pressures, is challenging though fundamental to the success of the financial sector and the wider economy." – Jonathan Williams, Professor of Banking and Finance, University of Bangor
Banks have been at the heart of economic activity for centuries, but since the 2008 financial crisis scrutiny of their activities and regulation of their actions has become the focus of fervent academic, policy and political activity.
In this book, Andrew Whitworth argues that the institutional form of a bank represents the political compromise of a specific time and place. It can therefore change and this has implications for financial stability. Far from creating stability, he argues, the regulatory impulse of policymakers post-crash has inevitably led to greater instability.
Whitworth shows that the political response to change regulation influences the nature of banks as much as their behaviour. As the regulation changes the nature of what is regulated, this fails to lead to the avoidance of future boom and bust cycles and over time, banks and other actors, exploit this gap, and regulation is needed again to rein in the disruption their new pattern of behaviour inevitably instigates.
1. Introduction: what is a bank? 2. The financial-regulatory cycle 3. Other ways of banking: the UK experience, 1945–70 4. Competition and Credit Control (C&CC) and the secondary banking crisis 5. The Banking Act 1979 and Johnson Matthey Bankers 6. Returning to the question: how the financial-regulatory cycle creates financial instability 7. The City revolution, 1987 Banking Act and two international bank failures 8. New Labour reforms and the 2008 financial crisis 9: The post-crisis response 10: Conclusion: banking regimes
Andrew Whitworth is a senior fintech specialist at the Bank of England.