Real markets must be fair

The following are excerpts from a recent speech by Mark Carney, governor of the Bank of England, at the Guildhall in London: Markets can be powerful drivers of prosperity and security for all.

Financial markets matter. By financing firms to hire, invest and expand, markets drive growth.

By opening up cross-border trade and investment they create new opportunities for businesses and savers. By transferring risks to those most willing and able to bear them markets help households and investors insure against the unexpected. Only real markets can deliver. Real markets are resilient. They don’t collapse when the going gets tough.

Real markets are fair. Participants compete on merit rather than collude online.

Real markets aren’t ends in themselves but means to much greater ends.

Only markets that transparently serve the real economy can retain the trust of society to operate; in other words, only real markets have social licence.

The crisis and its aftermath laid bare that many of our markets didn’t live up to these standards.

It is hardly surprising that only a third of people believe markets work in the interests of society. The more people see, the less they like. People trust markets less with age. And yet most people think markets will become ever more important. . .

Real markets don’t just happen. They depend on the quality of the market infrastructure.

That means hard infrastructure, the plumbing of markets that determines the mechanics of markets; and soft infrastructure, like standards and codes that define how market participants should behave.

Robust market infrastructure is a public good. But like many public goods it risks being undersupplied.

If taken for granted the infrastructure that supports markets won’t keep pace with their dynamism, just as it failed to do so in the run-up to the crisis.

We all have a responsibility to stop this from happening again.