Queen Asks Bank Bosses About Financial Crisis
The Queen has finally had her question answered on why nobody saw the financial crisis coming during a visit to the Bank of England.
Four years ago, during the height of the global crisis, the Queen famously asked: "Why did nobody notice it?"
While on a tour of the Bank with the Duke of Edinburgh, she was given a thorough explanation of the 2008 downturn by Sujit Kapadia, who is on the bank's Financial Services Committee.
During the discussion, the Queen made her thoughts on the crisis clear, saying that the City regulator, the Financial Services Authority (FSA), "didn't have any teeth" and that there was complacency in the City.
She said to the workers: "People got a bit lax ... perhaps it is difficult to foresee (a financial crisis)."
The Queen also asked what authorities were doing now to prevent another global downturn.
When told by an employee that the men and women in the room were there to prevent another one, the Duke jokingly said: "Is there another one coming?"
In the briefing, Mr Kapadia gave the Queen three reasons behind the crash of 2008 that brought banks around the world to their knees.
He told her that financial crises were like earthquakes and flu pandemics and, because they are rare events, they are difficult to predict.
He also said there was a new paradigm where people thought that markets were efficient and risks could be managed better than before.
"People thought markets were efficient, people thought regulation wasn't necessary," he told the Queen.
"Because the economy was stable there was this growing complacency.
"(Thirdly) people didn't realise just how interconnected the system had become."
Mr Kapadia said the Queen was very interested in what the Bank was trying to do to prevent another crisis.
"(She asked) what initiatives are in place, is the system less interconnected than it was before.
"The strongest thing I got (from the Queen) is what are we trying to do so it doesn't happen again.
"She actually agreed that it was very difficult to predict and she did latch on the idea that it is probably a bit like the flu pandemic."
Mr Kapadia said he then explained various reforms that had been put in place to keep economies stable.
The FSA has responded to the Queen's comments.
"We've widely acknowledged that the regulatory approach before the financial crisis in 2008 was flawed and has since been completely changed," a statement said.
"Parliament is now awaiting Royal Assent for the Financial Services Bill, which will determine the powers for the new regulators that will be created next year."
During the visit to the Bank, the Queen and the Duke also toured vaults full of thousands of slabs of gold worth billions of pounds and briefly inspected some of the gold.
The royal couple then signed a million pound note each for the bank's guest book.
The Queen was intrigued when she was shown the very first banknote she had signed for the guest book on November 29, 1937, as an 11-year-old.
The signature was a simple "Elizabeth" written in a neat young girl's script on a thousand pound note in the book.
On signing the note, the Queen said of her signature: "It hasn't improved much you know."
It was the Monarch's eighth visit to the Bank of England. As she walked out of the building towards a large crowd of people waiting outside, she said of her visit: "Very interesting, isn't it?"