Britain is heading for financial crisis worse than the 2008 collapse and the Bank of England (BoE) is “asleep at the wheel,” a think tank has warned.
A devastating report by the Adam Smith Institute (ASI) has blasted the BoE’s stress tests – which are meant to check the resilience of a bank to economic shocks – as being like “a ship radar system that cannot detect an iceberg.”
The report’s author, Durham University professor of finance and economics Kevin Dowd, said every single UK bank would fail “more rigorous” stress tests used by the US Federal Reserve.
He predicts Britain is sleepwalking into a second global financial crisis which will be even bigger than the last one.
Dowd argues in the report titled ‘No Stress II: the flaws in the Bank of England’s stress testing programme,’ that current BoE “health checks” on banks are “worse than useless.”
“The purpose of the stress-testing program should be to highlight the vulnerability of our banking system and the need to rebuild it. Instead, it has achieved the exact opposite, portraying a weak banking system as strong,” he writes.
“This is like having a ship radar system that cannot detect an iceberg in plain view.”
“The Bank of England is asleep at the wheel again, and we will be back to beleaguered banksters begging for bailouts - and the taxpayer will be ripped off yet again, but bigger this time.”
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