Professor Patrick Honohan:

We could get into a lengthy discussion but I want to focus on one thing which I think is important. The banking system is a fragile animal. It generates a lot of potentially good resources for investment in housing and other things but it creates risks. It has to be managed carefully so that the investors who can do terrific damage to the economy by pulling out their money fast will not want to pull out their money. It is a delicate balance. That is why it becomes such a huge issue and why we have elaborate central banks and regulations and so on. The Deputy is right in saying that banks are vulnerable to sudden withdrawals of funds. Therefore, they have to be managed in such a way that the funds will never want to go away. This means that what the Deputy describes as excessive profit seeking, but I would call excessive risk-taking, is reined in and the banks can work in a calm way to provide the financing needs and payments mechanisms demanded by the economy.