(Guest Post by Richard Boulton)
“Are Britain’s banks too big to save?” was the question Robert Peston set himself in his investigation last Tuesday (Britain’s banks: Too big to save?, BBC2, 21.00, January 18th – you can see it on the BBC’s iPlayer until the 25th).
Strong on history, including a hilarious account of how the Basel 1 rule on 8% reserves was agreed, and featuring a stellar list of critics of bank regulation, the programme never looked seriously at any radical solutions. This was despite a promising start which mentioned fractional reserve banking as an underlying cause of the problem and featured Cobden Centre Chairman Toby Baxendale without mentioning the Centre itself.
So, sadly, and perhaps predictably, opposition to fractional reserve banking was later typified as “religious” by Peston in a question to the Bank of England’s Paul Tucker and there was little discussion about how the banking laws might be changed. An explanation of the effects of fractional reserve banking stopped short of explaining the money multiplier as a contributing cause to the amount of money sloshing around.
Despite this, the programme brought many of the issues to a wide audience. You can see Robert Peston’s blog about the programme’s subject, Josh Ryan-Collins of nef’s response and Toby Baxendale’s comments about it here.