32  Haldane (2011), Mehran and Mollineaux (2012). 33  Bank of England (2012), Bank of England (2011b). BIS central bankers’ speeches  9  In finance, these tragedies of the commons are, if anything, more likely than in other fields (seas, beaches and forests). The financial crisis attests to that. If there were a benign, enlightened regulatory planner, able to redirect competitive forces, this could potentially avert future tragedies of the financial commons. Fortunately, there is. References Aikman, D, Haldane, A G and Nelson, B (2010), “Curbing the Credit Cycle”, available at http://www.bankofengland.co.uk/publications/Documents/speeches/2010/speech463.pdf. Angel J, Harris L and Spatt C (2010), “Equity Trading in the 21st Century”, Marshall School of Business working paper. Bank of England (2012), “Record of the interim Financial Policy Committee Meeting, 16 March 2012”, available at http://www.bankofengland.co.uk/publications/ Documents/records/fpc/pdf/2012/record1203.pdf. Bank of England (2011a), “Instruments of Macroprudential Policy – A Discussion Paper”, available at http://www.bankofengland.co.uk/publications/Documents/other/ financialstability/discussionpaper111220.pdf. Bank of England (2011b), “Record of the interim Financial Policy Committee Meeting, 23 November 2011”, available at http://www.bankofengland.co.uk/publications/Documents/ records/fpc/pdf/2011/record1112.pdf. Barclays Capital (2012), “Over Promising? Encumbrance at European Banks”, 8 March. Byatt, A, Fothergill, A and Holmes, M (2001), “The Blue Planet: A Natural History of the Oceans”, British Broadcasting Corporation. Bebchuk, L A and Fried, J M (2003), “Executive Compensation as an Agency Problem”, Journal of Economic Perspectives, Vol. 17(3), pages 71–92. Brunnermeier, M K and Oehmke, M (2010), “The Maturity Rat Race”, National Bureau of Economic Research, Working Paper 16607.

Andrew G Haldane: Financial arms races Speech by Mr Andrew G Haldane, Executive Director, Financial Stability, Bank of England, at the Institute for New Economic Thinking, Berlin, 14 April 2012. All speeches are available online at www.bankofengland.co.uk/publications/speeches  *  *  *  Elephant seals have got too big for their beaches. A large specimen might weigh over 8000 lbs (3700 kg).1 Their size has a simple evolutionary explanation. Large males fight for the right to mate with a whole beach full of females. For elephant seals it is, quite literally, winner-takes-all. And the key to winning is simple – size. No-one is going to argue with a male swinging around his proboscis on the beach. In that way, size has become the dominant gene in the evolutionary trajectory of the elephant seal. But size is not costless for the elephant seal. It makes them easy prey on land. At times in the past, this has threatened their very existence. In the 18th century, their main land predator – man – hunted elephant seals for their blubber and fur. In the 19th century, their numbers fell rapidly to below 100 and for a time they were believed to be extinct.2 Just in time, governments intervened to place restrictions on hunting, nationally and internationally. Today, elephant seal numbers have swelled to above 800,000. The hand of government has protected them from man – and from themselves.