Andrew Haldane: Creating a Socially Useful Financial System 2/5

The video explores the social utility of finance, focusing on inefficiencies in financial markets due to arms race dynamics. It uses the analogy of elephant seals to explain how competition can lead to suboptimal outcomes. The concept of the tragedy of the commons is discussed in the context of finance, highlighting the role of information asymmetry. Examples from the past, present, and future illustrate these dynamics, including high-frequency trading and the quest for safety in banking. The video concludes with potential interventions to mitigate these issues.

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