14 November 2024

Mansion House Speech: Positive Money Response

London, 14th November 2024 - Positive Money responds to Chancellor Rachel Reeves first Mansion House speech.

Responding to Reeves’ comments that regulatory changes to eliminate risk after the financial crisis have ‘gone too far’, Simon Youel Head of Policy and Advocacy at Positive Money said:

“In parroting lobbyists’ lines that regulation has ‘gone too far’ since the last crash, the Chancellor risks ending up red-faced if and when the next financial crisis comes.

“The governor of the Bank of England himself recently cautioned that as memories of past crises fade, there can be pressure to water down regulation in the belief that a new era has arrived, despite the timeless nature of the threat. As history reminds us, financial deregulation has a habit of ending in tears, and there’s no reason to think things are different now, especially as private debt piles grow bigger and more fragile.

“Rather than deregulation to increase the growth and competitiveness of the City of London for its own sake, the government should focus on ensuring that the financial sector is able to serve the needs of society without crashing the economy again.”

Responding to the Chancellor’s decision to emphasise net zero and sustainable finance in the Bank of England’s remit letter, Simon Youel, Head of Policy and Advocacy at Positive Money, said:

“As the government and the Bank of England recognise, climate change and the green transition falls squarely within the Bank’s primary objectives for financial and price stability, as well as secondary objectives to support government policy.

“Amid the deprioritisation of climate under the last government, the Bank of England has unfortunately fallen behind other central banks on greening the financial system, so this signal from the new Chancellor should prompt them to renew efforts on this vital issue.

“The kind of policies we should now see from the Bank include targeted refinancing schemes to ensure lower interest rates are passed on to green projects that will bring down prices, stricter regulation that reflects the risks of fossil fuel financing, and the exclusion of loans to fossil fuel producers from the assets it accepts as collateral against its lending.

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