Conference, 14 July 2010

LEADING ECONOMISTS STORM THE BASTILLE OF HIGH FINANCE

On July 14th, Bastille Day, twelve leading economists presented their opinions of what is wrong with the world’s financial system – and how it should be radically reformed. They have been meeting at the London School of Economics (LSE) each month for a year, and a new book launched at the Conference – The Future of Finance: The LSE Report – draws together the various strands of their debate.

A key theme is that the scale of financial asset creation has been grossly excessive and far beyond the needs of the real economy – which is the ultimate touchstone of a healthy financial system.

The book includes new analyses of how finance affects the real economy, as well as, in some cases, radical reform proposals aimed not only at governments, but also at the giant funds that invest our wealth. The authors are all major figures in national policy or national debate:

Adair Turner, Chairman, Financial Services Authority 
Andy Haldane, Executive Director of Financial Stability, Bank of England
Paul Woolley, Senior Fellow, Paul Woolley Centre for the Study of Capital Market Dysfunctionality, LSE
Sushil Wadhwani, CEO Wadhwani Asset Management
Charles Goodhart, Emeritus Professor of Banking & Finance, LSE
Andrew Smithers, Founder of Smithers & Co.
Andrew Large, former Deputy Director, Bank of England
John Kay, Visiting Professor, LSE
Martin Wolf, Financial Times
Peter Boone, Executive Chair, Effective Intervention
Simon Johnson, Professor of Entrepreneurship at MIT’s Sloan School of Management, and Senior Fellow, Peterson Institute for International Economics

The first chapter is by Adair Turner, Chairman of the Financial Services Authority and a member of the G20’s Financial Stability Board charged with developing a global regulatory regime.

Adair Turner’s contribution argues that ‘There is no clear evidence that the growth in the scale and complexity of the financial system in the rich developed world over the last 20 to 30 years has driven increased growth or stability’, and identifies the most crucial problem as volatile credit supply and pricing arising from the interaction of banks, financial markets and real estate finance. His analysis defines the issues to which he and the other authors propose solutions.

The full list of authors and titles is attached. The titles demonstrate the breadth and depth of the study. The group was convened at LSE by the Paul Woolley Centre for the Study of Capital Market Dysfunctionality and by the Centre for Economic Performance (CEP).

At the Conference, the keynote address was by Vince Cable, Secretary of State for Business, Innovation and Skills.

The book launched at the Conference is ‘The Future of Finance: The LSE Report’ by Adair Turner and others is available in print. Click here to order.

For any enquiries please, contact: H.Ogborn@lse.ac.uk . Tel: 020 7955 7048

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