“Greed,” “disregard for risk” and “gross mismanagement” helped cause the banking crisis, according to the new deputy head of the Central Bank.
In his first public address the new deputy governor of the Central Bank Cyril Roux questioned whether ever increasing rules and directives are the best way to regulate the banking industry, or if needs to be a switch to so called “principles based” framework.
In a hard hitting speech he hinted at a shift in focus for regulators in general, away from a focus on what banks do and onto focusing on bankers themselves.
“Few would dispute that some of the most galling failures have had very little to do with capital requirements and everything to do with greed coupled with disregard for the risks, or gross misjudgement about them,” he said.
The focus of banking regulation tends to be on guarding against the risk of damaging bank runs, he noted. In contrast supervision of the securities industry, including bond and share dealing, grew out of the need to protect investors, he said.