In this inflation crisis, banks should prioritize their reputations

Banks may soon match energy companies for political unpopularity – posting soaring profits, even as customers struggle with the cost-of-living crisis, and higher interest rates. To safeguard their long-term interests, banks need to show much greater social awareness in their actions.

A new windfall tax on Spanish banks – coupled with mortgage holidays in Poland that will halve banks’ profits – should give lenders across Europe pause for thought. More intervention in the banking sector is coming. The question is how much, and what banks should do.

Poland’s mortgage holidays have been accompanied by rising pressure from politicians for higher deposit rates, even while banks have argued that the holidays will force them to keep deposit rates low.

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