Essays in Honour of Charles Goodhart, Volume Two
Edited by Paul Mizen
Chapter 10: Working with market forces
10. Working with market forces Michael Foot1 1. INTRODUCTION I have much for which to be grateful to Charles. Our careers in the Bank of England overlapped by many years, our interests often required close collaboration and for two years I had the pleasure of working directly for him. The biggest single impact this had for me was to strengthen an already deeply held but poorly articulated view of the importance of working with markets rather than against them. Not surprisingly, therefore, when I was asked to take part in this conference (and being in my eighth year as a ﬁnancial regulator, which equals 20 years in many other professions) I immediately thought of drawing on Charles’s extensive work on ﬁnancial regulation.2 More speciﬁcally, I decided to pick up and try to take forward from my perspective some of his work on how the regulator might work with market forces. This has been given added impetus by the fact that the Financial Services Authority took this subject as one of its themes for detailed analysis in 2001. What follows is an early and personal contribution to that sizeable task. I should make clear from the outset that the FSA’s work and my own interests stretch across the regulation of all ﬁnancial services and to both prudential and conduct of business aspects. Charles, in contrast, has always been particularly concerned with the prudential aspects of bank regulation.3 For the purpose of this chapter, I too will focus on bank prudential...
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