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Back to basics call for banking
Published: 7 November 2008
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A strong call for the banking industry to go back to basics came from Austria’s Vice Minister for Finance Christoph Matzetter in the closing moments of UNI-Europa Finance’s conference in Vienna. He was presented by UNI Finance president Allan Bang with a dossier of union proposals for greater regulation and transparency for the finance industry to avoid a repeat of the current financial and economic crisis. “There is nothing worse to lose than trust - because functionality collapses,” said the Social Democrat Vice Minister who made a comparison between the current crisis and the bursting of the tulip bubble in 17th century Holland. The Austrian government has been forced to bail out its own banking industry as finance ministers from Europe and around the world ponder long-term solutions. Mr Matzetter’s back to basics recipe includes: * “old fashioned” accounting principles that take a cautious view of both assets and liabilities. “You bank a profit when the money arrives, not - like under the US system - when you first shake the customer’s hand.” * building a firewall again between banking business and financial market business. * measures to puncture market bubbles before they become too dangerous. “We have to burst the blister quickly.” * an alert system for the regulators and governments - “a traffic light system”. If a nominal tax on financial transactions was introduced this could be raised, for instance, when the light goes to orange to cut profitability and restore stability. Some of the tools to restore stable markets could be a cut in leverage, excluding speculators from commodity markets by restricting access and moves to deal with tax evasion. He looked forward to a finance industry in ten years time that will be the less often in the headlines and banking restored to its traditional role of safe haven, of loans provider and payment transactions - not as exciting or chic, but better for the sector. Allan told the Vice Minister that UNI will soon be meeting the European Commission and will be re-presenting UNI Finance’s own 13-point plan on behalf of three million finance workers around the world for tackling the crisis. It was first presented in May. “We hope that they will be listening this time,” said Allan. UNI Finance ingredients include the creation of independent rating agencies, cracking down on tax havens and bringing the workers’ voice into the process of global financial reconstruction. |
