What price a ruggedised financial system? The latest safety feature, the Financial Services Authority’s new liquidity rules, comes with a £2.2bn annual price tag as banks increase holdings of low-returning government bonds by an initial £110bn to build up larger and higher-quality buffers. Coupled with higher capital requirements, this should help make toxic institutions safer for society. Self-insurance forces them to internalise more of the costs they periodically dump on taxpayers. Banks will find it harder to generate profits by taking on extreme liquidity risks, knowing they will be bailed out in a crisis.

Lobbyists argue this threatens the competitiveness of UK banks. The regulator has done well to stick to its guns. Its counter-argument is that the measures will enhance the UK’s financial services sector by reassuring counterparties that the companies operating there are sound. Having large players running high-risk funding models dependent on wholesale and securitisation markets was hardly a basis for sustainable competitive advantage for the UK in financial services. It is in every company’s interest to demand strong liquidity standards for its competitors, as the crisis showed that the weakest companies – think Northern Rock and HBOS – can easily trigger a crisis of confidence affecting all others.