By what legal authority can the banks demand repayment?

Thrugelmir

Southend1 wrote: »

Surely more is better because less will cause the banking system to collapse?

RBS has reduced the size of it balance sheet by a third, £750 billion. So progress is underway.

Banking system won't collapse. As long as schemes such as QE and Funding for Lending inject liquidity.

Southend1

Thrugelmir wrote: »

RBS has reduced the size of it balance sheet by a third, £750 billion. So progress is underway.

Banking system won't collapse. As long as schemes such as QE and Funding for Lending inject liquidity.

True but the liquidity they are injecting is government debt so it just shifts the problem onto the (future) taxpayer. If we really reduced the amount of debt in the economy it would shrink because money=debt.

Thrugelmir

Southend1 wrote: »

If we really reduced the amount of debt in the economy it would shrink because money=debt.

Hence why BOE has been so pro-active since the NR crisis of August 2007. The UK institutions would struggle to raise the funds to support mortgage lending as it currently stands. As banks globally have retracted their activities and shrunk their balance sheets.