Happy Friday and welcome to another issue of Net Interest, my newsletter on financial sector themes. This week we’re talking about regulation. Bit dry, I know, but it’s important so I hope you’ll stay with me! As ever, I’m hugely appreciative when you share Net Interest with friends and invite them to sign up. And please don’t hesitate to get in touch with feedback. Thanks.

The Policy Triangle

“There are no solutions. There are only trade-offs.” — Thomas Sowell

When Bernie Sanders wore mittens to the presidential inauguration last month, rather than gloves, he made a trade-off: hand warmth over manual dexterity. It’s the kind of trade-off we all make, every day.

Policy is all about trade-offs, too. The pandemic response is a stark demonstration. For the past year, policymakers have had to trade public health against the economy. For sure, the relationship is not strictly binary, but in order to optimise overall welfare, policymakers need to make choices. This one is a difficult and highl…