The Bank of England (“the Bank”) released their Financial
Stability Report today ... or should we rename this the Financial
Instability Report as that's what we've seen for the last few months.
The Report reviews the UK banking system every six months and started back in 1996. In that first report, the Bank said: “The most recent figures suggest that the banks are in good shape. They are strongly capitalised and, on that basis, well placed to expand their lending.”
And that's just what they did. For example, today's report notes that UK banks had an equal amount of deposits to loans back in 2001 but, by 2007, had lent £700 billion more than they had on deposit.
£700 billion more than they had in deposits? Were they mad?
Yep.
The Report reviews the UK banking system every six months and started back in 1996. In that first report, the Bank said: “The most recent figures suggest that the banks are in good shape. They are strongly capitalised and, on that basis, well placed to expand their lending.”
And that's just what they did. For example, today's report notes that UK banks had an equal amount of deposits to loans back in 2001 but, by 2007, had lent £700 billion more than they had on deposit.
£700 billion more than they had in deposits? Were they mad?
Yep.
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