Throughout the world, we are seeing a widespread and much-needed debate about the sort of oversight we need for our financial services. It is becoming clear that we are suffering the consequences of a toxic mix of poor business decisions, badly misaligned incentives and a failure of regulation. For some, though, the very principle of free, competitive markets is in the dock.

Yet analysis of this and previous crises shows that it would be wrong to see competition as part of the problem, and deeply harmful if restricting competition was part of any solution.