Monday, December 22, 2008

Not to toot my own horn but....

On Labourhome when talking about the financial setup and the need for change in the post credit crunch world, I said:

"When it comes to control of the expansion of credit we really have to ask whether interest rates are a sufficient measure to control this. They are a blunt instrument and there are often cases where the requirements for consumer credit do not match the requirements for business credit so some kind of additional control mechanism would be useful."

As it turns out, I'm in pretty good company, Sir John Gieve the Bank of Englands deputy governor said:

"Maybe we need to develop something which bridges that gap and directly addresses the financial cycle and prevents the financial cycle and the credit cycle getting out of hand ... I think we need to complement interest rates, which are a blunt instrument - you set one interest rate for the whole economy - with something which is more financial-sector specific."

No comments: