Instead of abandoning competition and giving banks protected monopolies once again, the public would be better served by making it easier to close banks when they get into trouble. Instead of making banking boring, let us make it a normal industry, susceptible to destruction in the face of creativity.
Interpretation
Encourages competition in banking to foster innovation and protect consumers.
Raghuram Rajan emphasizes the importance of maintaining competition in the banking industry rather than allowing banks to operate in a monopolistic environment. He argues that by making it easier to close failing banks, the industry can become more dynamic and adapted to change, encouraging creativity and benefiting the public.
In practice
In a discussion about economic reforms, this quote can highlight the need for competitive banking policies.
The U.S. should worry about the effects of its polices on the rest of the world. We would like to live in a world where countries take into account the effect of their policies on other countries and do what is right, broadly, rather than what is just right given the circumstances of that country.
Customers often value a good more when its price goes up. One reason may be its signaling value. An expensive handcrafted mechanical watch may tell time no more accurately than a cheap quartz model; but, because few people can afford one, buying it signals that the owner is rich.
The problem with forbearance is that it always looks like a good thing to do until it stops working.
Perhaps the hardest challenge has been to persuade the public, impatient for rapid growth, of the need to ensure stability first. Growth, it is argued, is always more important, regardless of the looming economic risks.
Too many years away from academia renders you pretty incompetent at research and teaching. So I had to go back.
The gap in India has always been between the promise and the execution.
The reason we should do a carbon tax is because it's the right thing to do. It's economics 101, elementary stuff.
Thus, our national circulating medium is now at the mercy of loan transactions of banks, which lend, not money, but promises to supply money they do not possess
Unless we understand what it is that leads to economic and financial instability, we cannot prescribe -- make policy -- to modify or eliminate it. Identifying a phenomenon is not enough; we need a theory that makes instability a normal result in our economy and gives us handles to control it.
For it is an essential difference between capitalist and socialist production that under capitalism men provide for themselves, while under Socialism they are provided for.
Our economy is the result of millions of decisions we all make every day about producing, earning, saving, investing, and spending.
Wall Street has turned the economy into a giant asset-stripping scheme, one whose purpose is to suck the last bits of meat from the carcass of the middle class.
Subscribe for the occasional hand-picked quote. No noise.