Over-regulation poses dangers as a response to the economic crisis, according to Tony Blair in his autobiography.
He considers that too much regulation risks “squeezing the innovation” out of the financial sector.
He says: “First, the market did not fail. One part of one sector did. The way sub-prime debt was securitised, spliced and diced and sold on with no real appreciation of the underlying risk or value was wrong.”
“Regulations failed. Politicians failed. Monetary policy failed. The responsibility for the crisis should be shared, not borne by the market alone or even the banks alone.”
He says there must be systems of national and global supervision to understand and track the new financial landscape.
But he adds: “My preference is to approach regulation with caution, not to deny the financial sector a say in putting it right but to deal with it as a partner in trying to achieve the correct balance between supervision and regulation.”