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Regulating banks tightly 'not always feasible': PM Lee

Today's markets too complex to separate banking sectors, says PM

Published on Oct 8, 2012 6:00 AM
 
The desire to regulate banks more tightly in the aftermath of the global financial crisis is understandable but not always practicable, Prime Minister Lee Hsien Loong said on Sunday night. -- ST PHOTO: MUNSHI AHMED

The desire to regulate banks more tightly in the aftermath of the global financial crisis is understandable but not always practicable, Prime Minister Lee Hsien Loong said on Sunday night.

The pressure in the West to separate commercial banking from investment banking, for example, might in reality be impossible, he argued. The latter is "intrinsic to the financial system", he said.

In his response to a question on bank regulation at a dialogue session with Kiwi businessmen on Sunday night, Mr Lee weighed in on a debate raging in developed nations, especially ones where taxpayers' money have been used to bail out banks, to the outrage of many.

One argument is that a wall should be built between the safer commercial banking functions - that mainly involve taking deposits and giving out loans - and the more risky sort that hedge funds and investment banks engage in - which Mr Lee said sometimes amounted to "gambling".

 
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