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November 14, 2013

Banks may turn into weapons of wealth destruction: BBC’s Peston

By Vincent Huck

The problems that generated the financial crisis such as countries’ national debts and banks’ solvency haven’t yet been solved, BBC business editor Robert Peston said yesterday at a conference hosted by the Chartered Institute of Management Accountants (CIMA).

Peston said that whilst a lot had been done to tackle the financial crisis with austerity measures, households debts reduction and strengthening of the banks, he remained doubtful that it would be enough for a fully sustained economic recovery.

He said that the financial crisis had triggered an unprecedented economic situation whereby banks were put on life support through money creation.

"There is a huge amount of money being created, so much that we don’t know what will happen when you stop producing it, big banks might turn into weapons of wealth destruction," he said.

Peston reminded that developed countries remain highly indebted and warned that if the interest rates were to go up again it could be the start of yet another crisis.

CIMA’s European CGMA Conference focused on the theme ‘beyond the financials’ in clear reference to the critical role that management accountants are called to play as business leaders within organisations.

Sustainability was one of the main topics of the two-day conference. In the opening keynote speech Peston gave insights into the UK economic recovery and asked the audience:

"There is a recovery, but how sustainable is it? At the moment the UK is the fastest growing economy and there is a chance it will remain that way by the end of the year. But growth in UK trade is not at a sufficient level for a sustainable recovery," he said.

Peston concluded by saying that the UK recovery sustainability relied on the businesses’ investments response.

"Is the UK going to sustain this recovery?" he asked. "Yes. But I probably say that more with my heart than with my head."

However he told the audience that they shouldn’t feel gloomy:

"It is important that we go back on a growth path but let’s not forget that our standards of leaving are better than most of the rest of the world. We are a wealthy country."

Related links

The Chartered Institute of Management Accountants

CGMA European Conference: Beyond the financials

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