A recent report issued by the IMF (International Monetary Fund) indicates that the regulations, which are currently in place and supposed to protect the Western Banking Systems, could potentially do much more harm than good in the long term. The IMF even goes as far as describing them as ‘mutually destructive’; this is not a great place for the banking systems because they are still trying to claw their way out of the situation that nearly collapsed the global Western banking system.
Failed to support itself
The banking industry is failing itself because it is unable to support itself and has looked to local governments around the world to help bridge the gap to prevent the collapsing of an institute. What is more shocking is the amount of banks that are still reliant on this governmental support. If this support was removed there would be inevitable banking collapsing on a global scale.
The policies that are there which should be protecting the tax payers aren’t adequate for the tasks in hand, but more importantly is the need to work together to form a coherent banking system that has the same rules and principles around the world. This should prevent the system from fighting one government off with another, in essence, shifting the responsibility.
But this is not likely to happen because the governments would not be able to agree on the best course of action to proceed.
The worst hit
Europe banking institutes suffered the most damage in the collapse of the financial banking system in 2008; they had taken on a large proportion of the American sub-prime mortgage debt and felt it hard when the markets started collapsing.
They have managed to rectify some of the problems that have arisen and that includes the banks holding larger amounts of capital than previous. This is a positive step in the right direction but it is still a long way off from the ultimate prize, the banks taking back ownership from government hand-outs.
A move forward in this direction with the UK governments and the sell-off of some of the stake in Lloyds Bank, but they still hold a percentage of these shares. However, the UK taxpayers are unlikely to see the same with the RBS Group in the near future, as they are still not in a position to let the government go, it will be another three years before this happens.
The changes in the financial situation need addressing sooner to protect the consumers from the fatality of some banks globally. The policies need implementation that forces regulations on an industry that has chosen its own path for too long.
Changes that stabilize the financial markets from the ground up, it will allow the financial markets to recover in the global economies, which are still under huge stresses. There is the possibility of collapse and this is not in the interest of the global markets and action is needed now.