Back-slapping bankers will be thick on the ground in the Swiss ski resort of Davos this week as Rachel Reeves flies in to mix with the global elite. Little more than a week later, the Bank of England announced it would reduce banks’ capital requirements – the reserves they must hold against their assets to absorb potential losses. Moreover, the argument goes, lowering capital requirements will free up more lending capacity so that banks can support productive economic activity. “If banks wished to expand lending, they could have done so using their existing capital headroom,” they said. But, as Cobham argues, after watching the events of 2008 unfold, “we know that the risks that the financial sector creates will end up being socialised when they crystallise –so we’ll all pay for them”.

Source: The Guardian January 18, 2026 23:02 UTC