David Miles points out that one underlying problem was that "UK banks had a great many assets that had been acquired on the wrong terms; the interest rates charged on them, or the yields implicit in their purchase price, did not allow for their risks." The capital they held was also insufficient given the risks. He goes on to say that the economic issue now ".is how we get through a transition to an economic system that is more sustainable without exacerbating a recession and doing lasting harm to productive capacity."
Published on
30 September 2009
Press release