Here is a version of a recent speech that I gave to a group of Conservatives about how we can ensure that banks better serve British society.
Banks are back on the front page news. Having spent a decade and a half in the City, I'm going to talk about how we can make banking better.
When most of us think about banks, we think about something esoteric: wealthy men in towers, wearing corporate costume, doing a mysterious kind of magic.
The stereotype is not entirely misplaced. The City of London is on our doorstep but few of us know what it really does.
In reality, finance is our lifeblood.
When my wife and I wanted a home with our one year old, we had to borrow the money for a mortgage.
When most people start a business, they must borrow the money from somewhere to do so.
When we save and hope to retire one day, we do so through the mechanism of finance.
The City pays enough tax to fund the NHS.
But things have gone wrong.
The price of two loaves of bread today would've bought you three loaves just over a year ago.
On average, we haven't had a wage increase for going on two decades.
Economic growth - new business - is close to zero.
We have to look behind the magician's curtain to see what's happened.
The big secret is that banks conjure money out of nothing. The original bankers, the goldsmiths, realised 500 years ago that they could create credit through IOUs, loans.
But where does the money go today?
Mostly to old business, to existing assets, to inflate prices, the stock market, and a lot of it trickles around the financial system like a closed pipe. It is safe but not very beneficial to society.
We must ensure that banks lend to new business, to new assets and growing businesses. That is how we get growth going, wages up and inflation down.
This means more banks, not fewer, and more competition. We need a genuine free market in money and credit.
So there you have it: the magic. What banks do, what went wrong, and how we can make banking beneficial for everyone.
