Those of us who lived through the global financial crisis of 2007/08 and its aftermath never imagined we would experience anything like it again. As the coronavirus outbreak threatens the very fabric of our economies and our societies, we should be very grateful that we did.
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Consider for a moment if we had suffered the economic and financial shock of today back in 2007. Banks would have had no capital or liquidity buffers to withstand the shuttering of markets. The banking system would have collapsed.
Today, the measures taken by the industry and by regulators to prevent a repeat of the financial crisis are keeping the banking system afloat. But the reasons to be thankful go further than that.
In 2007, banks were the cause of the crisis. In 2020, they are an intrinsic part of the solution.
The relative safety of banks allows them to fulfil a new – hopefully short-term but absolutely vital – role as the transmission system for the extraordinary measures taken by governments around the world to support their populations and their economies.
As one top global bank chief executive told Euromoney in late March: “Our industry is proving itself – which many of us never doubted – to have an essential social purpose, and we must live up to this responsibility.