Could there be another financial crisis around the corner? The Bank of England claims the big banks have been fixed. Our new banking study shows they haven't.
The big banks are supposed to have built up their reserves since 2008. They are meant to be taking fewer risks. They are assumed to be much safer now. That's what the Bank of England says anyway.
But hold on a minute: the Bank of England didn't see the last financial crisis coming. It thought the banks were fine in 2007. Why should we trust it today?
The UKIP Parliamentary Resource Unit has done its own study of the UK and European banks. We found that the Bank of England is masking serious problems. Its stress test of the banking system relies on dodgy risk assessments and overoptimistic economic projections.
So we did an alternative stress test – looking at what would happen if the banks faced the same shocks as they did in 2008. Our test shows that the big banks are actually no safer now than they were then.
The big banks are still broken. They have only survived because of massive subsidies from central banks. This week the Federal Reserve raised interest rates from record lows for the first time in almost a decade. But credit is still far too cheap – and the big banks can no longer survive without it.
Banker bashing is very fashionable. Popular movements rail against the greed of financial fat cats. But the problem goes much deeper than the bankers: the problem is the system.
Central banks, like the Bank of England, are actually the core issue. Providing unlimited credit to a few banks is what has made them too big to fail. Bailing them out at the taxpayer's expense is what has encouraged them to take more risks.
The banking system needs radical reform. For a start, the retail banks urgently need to beef up their reserves. Otherwise another serious crisis is inevitable.
Read our paper to find out more.
"A revolutionary text ... right up there with the Communist manifesto" - Dominic Lawson, Sunday Times
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