HOP 4. How Safe is the Banking System?

Richard Dale

Professor Dale discusses potential sources of structural or systemic weakness in the banking system at three levels. First there is the possibility of major shocks to the system: here the focus is on Third World debt, the pace of financial innovation and the expansion of banks into non-bank, particularly securities, activities. Second, there is the problem of contagion—that is the propensity for banking problems in one area to spread to other areas; and finally Professor Dale discusses the availability of lender of last resort facilities in the event that a major financial disturbance should occur.

Richard Dale is Professor of International Banking and Financial Studies at Heriot-Watt University, Edinburgh, and Editor of the Financial Times Regulation Report. He was previously a full-time consultant to N. M. Rothschild and Sons Ltd and in 1981-1983 held a Rockefeller Foundation International Relations Fellowship at the Brookings Institution, Washington DC. He is a member of the Advisory Council of The David Hume Institute.