The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

The rise of state-owned banks

The crisis suggests that privately owned banks are not self-evidently better managed nor more effective at allocating capital than state-owned ones.

The banking and capital markets of the world’s developed economies are the ultimate expression of free market capitalism: wasteful, inefficient, prone to ludicrous excess in providing capital at the wrong price to the wrong users and then to periodic panic and failure. Time and again, the free market shows itself to be the worst system of capital allocation... with the possible exception of all the others.

The most recent market failure has once again sent the champions of free markets pleading for state bailouts, which politicians, fearful of a voter backlash, have happily used voters’ own money to provide. Nationalization of a failed bank in the UK and provision of state financing for its wobbling peers, US public funds used to guarantee the liabilities of a failing investment bank: these are supposed to be temporary solutions. In fact, they reveal just how closely the hand of the state always rests behind the supposed free market in money.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of acces below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£68.33 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree