The world is sleepwalking towards another financial crisis as governments fail to tackle the causes of the crash a decade ago, warns Caritas.
As a wake-up call, Secours Catholique-Caritas France has published a report called “Finance to Citizens”. The report outlines the bold reforms necessary to avoid a recurrence of the disaster.
In accessible language stripped of experts’ jargon, the report explains how the global financial system increasingly affects all of our lives and impacts poverty and global inequality.
Read the full ‘Finance to Citizens’ report
Read a summary of the report
It highlights how lessons have been not learned from the 2008 crisis. Reforms instigated by the G20 and the Basel Committee have not led to a drastic reduction in the risks to society; and although the central banks’ policies of quantitative easing rescued the financial system, they have not served the real economy.
Speculative activities remain too attractive, shadow banking is no better regulated, banks are still too big and credit is insufficiently aligned with the economy.
The report argues that the public’s knowledge of and participation in the debate on the future of finance is essential. It also emphasizes how we must open up rule-making bodies to citizens and to developing countries, and make them more answerable to national parliaments.
The system would then be forced to reorient financial flows towards socially and economically useful activities. And prudent ones too. For example, by introducing an increase in the ratio of equity capital demanded by banks for harmful activities, like those involving fossil fuels.
These measures will enable the short-term logic of financiers to be broken and a far-reaching revision of the system. Essentially this should be done by controlling shadow banking, fixing sound prudential rules and limiting the activities of banks to those that serve the public interest.
The ‘Finance to Citizens’ report, which is rooted in the social doctrine of the Church, is published ahead of European elections in May 2019 with the aim of encouraging policy-makers and candidates to reinvest in this issue, which should be at the center of political debate.
