19  6  More fundamentally, to think that compensation arrangements can ensure virtue is to miss the point entirely. Integrity cannot be legislated, and it certainly cannot be bought. It must come from within. See Carney (2013). BIS central bankers’ speeches  Fourth, building a sense of vocation and responsibility To build this sense of the systemic, business ultimately needs to be seen as a vocation, an activity with high ethical standards, which in turn conveys certain responsibilities. It can begin by asking the right questions. Who does finance serve? Itself? The real economy? Society? And to whom is the financier responsible? Herself? His business? Their system? The answers start from recognising that financial capitalism is not an end in itself, but a means to promote investment, innovation, growth and prosperity. Banking is fundamentally about intermediation – connecting borrowers and savers in the real economy. In the run-up to the crisis, banking became about banks not businesses; transactions not relations; counterparties not clients. New instruments originally designed to meet the credit and hedging needs of businesses quickly morphed into ways to amplify bets on financial outcomes. When bankers become detached from end-users, their only reward becomes money. Purely financial compensation ignores the non-pecuniary rewards to employment, such as the satisfaction from helping a client or colleague succeed. This reductionist view of the human condition is a poor foundation for ethical financial institutions needed to support long-term prosperity.

BIS central bankers’ speeches  References Abel, J, Deitz, R and Su, Y (2014), “Are recent college graduates finding goods jobs?”, Federal Reserve Bank of New York Current Issues in Economics and Finance, 20(1). Albanesi, S (2007), “Inflation and inequality”, Journal of Monetary Economics, 54(4), May, pages 1088–114. Alesina, A, Di Tella, R and MacCulloch, R (2004), “Inequality and happiness: are Europeans and Americans different?”, Journal of Public Economics, 88(9-10), pages 2009– 42. Atkinson, A and Morelli, S, (2014), “Chartbook of Economic Inequality”, ECINEQ Working Paper 324. Autor, D, Katz, L and Krueger, A (1998), “Computing inequality: have computers changed the labour market?” Quarterly Journal of Economics, 113(4), pages 1,169–213. Autor, D, Katz, L and Kearney, M (2008), “Trends in US wage inequality: revising the revisionists”, Review of Economics and Statistics, 90(2), May. Baldacci, E, L de Mello, and G Inchauste (2002), “Financial Crises, Poverty, and Income Distribution”, Working Paper 02/4, International Monetary Fund, Washington, DC. Barton, D and Wiseman, M (2014), “Focusing capital on the long term”, Harvard Business Review, January-February. Carney, M (2013), “Rebuilding Trust in Global Banking”, Speech at the Richard Ivey School of Business, 25 February. Available at http://www.bankofcanada.ca/2013/02/rebuilding-trustglobal-banking/ Clark, E (2012), Remarks delivered at the Bank of Canada Annual Economic Conference, “Financial Intermediation and Vulnerabilities,” Ottawa, 2 October 2012. Corak, M (2013), “Income inequality, equality of opportunity, and intergenerational mobility”, Journal of Economic Perspectives, 27(3), Summer. Easterly, W and Fischer, S (2001), “Inflation and the poor”, Journal of Money, Credit and Banking, 33(2), May.