“Banks take in deposits over the short term, yet lend over the long. This is an inherently risky business. But it’s also crucial to growing the economy. So, for a long time, governments around the world have provided implicit backing for its continued activity, agreeing to supply liquidity to banks with public money, when needed, to keep the system ﬂowing. The ﬁnancial crisis, and in some instances the behaviour of individual bankers in the years leading up to it, demonstrated that the ﬁnancial system abused the trust implicit in that social contract. Now, as a result, taxpayers are rightly unwilling to provide this kind of blanket guarantee any longer and it is something we all need to recognise.
“It is for this reason, among others, that we must shift away from relying on traditional bank lending and instead broaden the means through which businesses and entrepreneurs access capital and ﬁnancing. The answer lies in healthy, diverse capital markets, a centuries old innovation, born in Europe, ﬂourishing in America, but which remains underdeveloped and misunderstood here. I believe that needs to change.
“That is one of the reasons why I asked William Wright to take on this important piece of research. His ﬁndings are both fascinating and startling. He outlines the extent to which capital markets are an asset for the UK economy – the oxygen of commerce from which we all beneﬁt. He explores the enduring lack of understanding and pervasion of half-truths that limit their proper use, and he offers up some interesting challenges facing the banking industry, the facilitators of capital markets around the world.
“Since the ﬁnancial crisis, Barclays has been on a long journey to address some of these issues. This report is another step forward in that process and, I hope, will stimulate yet further debate about how UK businesses can harness the global capital markets better than they have done to date.”