Chapter News

Shaken but not stirred? The banking system seven years after the crisis

On October 29th, Dr. Dombret, Executive Board member of the Deutsche Bundesbank, delivered a speech at the Financial Markets Group Research Centre of the London School of Economics and Political Science in London.

Some of the items discussed include the reconstruction of the financial infrastructure after the banking crisis, lessons learned, plans forward and the various challenges regarding the baking system, finalizing the recovery and resolution framework and learning to live with different market structures.

In my speech tonight I will outline the status quo in the banking sector and the most pressing challenges. “Shaken but not stirred” might be an accurate description of its present state, which still presents many challenges. In saying that, I am, of course, alluding to one of your country’s most successful exports: The agent who not only solved the Cold War, but who has recently also begun to prevent wrongdoing on the financial markets – James Bond.

In the 2006 version of Casino Royale, for example, Bond’s opponent, Le Chiffre, engages in insider trading and market manipulation. In anticipation of his terrorist plot to destroy a prototype aeroplane, he bets on the fall in the stocks of the aircraft manufacturer.

Moreover, he engages in extreme leveraging: by financing the bet with money borrowed from African rebels, whom he has promised high returns on the ‘invested’ money. Of course, it is not the supervisory authority, but Her Majesty’s agent James Bond who prevents the attack, resulting in the collapse of Le Chiffre’s fraudulent plan.

Insider trading, market manipulation, extreme leveraging, terrorism financing – you can imagine how daunting a task like financial supervision is in a world without James Bond.

Seriously, though, besides the aspects I have just mentioned, there were even more problems with banks and the financial markets before the financial crisis.

To access the remainder of speech Dr. Drombet’s , click here

Compliments of Deutsche Bundesbank