Gemma Harle is managing director of TenetLime
It appears that the penny might have dropped among policy makers. Bank of England deputy governor Paul Tucker has called for more direct intervention from central authorities to ease credit conditions for borrowers.
Though not a line currently taken by the governor, Paul Tucker, the likely successor to Mervyn King, has opened up the way for the Government and the Bank of England to consider what more they can do to ease credit conditions for borrowers.
This is significant because the debate has moved from one where monetary policy is a more passive if benevolent force and fiscal policy does the extra work to a tacit admission both need to do more to enshrine growth in the economy.
Imposing capital requirements that do not suit the economic times is at last a debate we can legitimately have.
The cost of borrowing should reduce and as long as the release of capital is not abused by lenders should facilitate a little more confidence and breathing space for all concerned.
While the sins of the banks are plentiful it is unfair to label them as the architects of the underlying challenges facing the eurozone and alleviating tight credit conditions would lighten the load borne by the public, regulators and other public bodies.
This line is not at odds with the IMF’s view that more monetary and credit easing may be needed to reduce the risk of a permanent loss of growth and output.
But that should not mean just more infrastructure projects. In the real world this needs to translate into more confident mortgage and small business lending.