BBC Radio 4 2016-09-21

Good morning. This week the Financial Conduct Authority has forced a pay-day loan company to repay ￡35 million to customers for unfair practices. Meanwhile Wonga, another pay-day lender and probably the best known, has recently reported losses. It seems to have become less likely that anyone will make eye-watering profits again in this financial sector.

Today is St Matthew’s Day. He’s the patron saint of bankers and tax collectors. He didn’t loan money, but was guilty of financial sharp practice before being recruited by Jesus as an unlikely disciple. He collected taxes for the Roman occupiers of his country 2,000 years ago. Since there was no salary on offer, tax collectors then were expected to cream off something for themselves to make it worthwhile. They were extortioners of their neighbours, collaborators with an occupying power, accused of loving money more than their own people.

We all need some money to function but we don’t often reflect on what money is. 85 years ago today – on St Matthew’s Day 1931 – Britain abandoned the Gold Standard. It created huge anxiety at the time. Any direct relationship between our money and pounds of gold was abolished. We moved to what is sometimes described as fiat money, a currency declared by the government as legal tender. Our money only has value if we have confidence in “the promise to pay the bearer on demand” written on the face of our banknotes. Believing what the Bank of England says to its customers means we can transfer that promise to someone else and buy something. At the heart of our monetary system is a very big dollop of trust. Without trust we wouldn’t have a monetary economy at all.

I’m old enough to remember the devaluation of the pound in 1967. I recall the Prime Minister, Harold Wilson, saying on television “the pound in your pocket is still worth a pound”. He was widely ridiculed. Inevitably the cost of imported goods rose and inflation soared so prices went up. You needed more pounds to buy things. But it was an attempt, even if a clumsy one, to maintain trust in the monetary system at a time of crisis.

The straightforward action taken by the FCA this week is intended to strengthen trust in financial regulation. Money - and our use and abuse of it – sometimes exposes the darker side of human nature. But regulation alone isn’t enough. Our monetary system’s very existence relies on our capacity to trust each other. I like to think that Matthew the apostle, drawn by Jesus to trust people rather than exploit them, would understand.