Regulation of Bankers' Bonuses - information from the latest Bank of England Quarterly Bulletin

If you caught Geoff's webinar in conjunction with the Bank of England on 4th November you will be aware that we're very excited about the partnership developing between tutor2u and the BoE. The BoE are expanding their support for teachers and we are already working together on using their data and information to inform our student revision conferences in March and April 2016.

Their latest Quarterly Bulletin has just been released and can be accessed from this link.

One of the really informative aspects of the latest bulletin relates to the increased regulation of bankers' bonuses. It is a topic that draws a lot of emotive responses from the general public, many of whom feel that the bonuses are undeserved given that they contributed to the risky behaviour that helped cause the financial crisis starting in 2007. The BoE are now reporting on the changes to the bonus awards and I thought this would make fascinating reading for students identifying the increase in regulation of the financial sector as the Government attempts to prevent some of the issues that caused market failure during the first decade of this century.

In short, the bonus has gone from almost zero regulation (with no reflection on any rules) to being highly regulated with the infographic below (taken from the bulletin) showing the difference. The summary box on page 8 of the bulletin also relates the bankers' bonus issue to the 'principal-agent problem' - that page alone would be a great read for your students.

They've also included a short video, explaining the issue of bankers' bonuses.