Column The wall crumbles

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: require bankers to cut their own pay, it may not quite work. The other obvious option is for government (or for a market regulator) to regulate the manner in which compensation is paid—they can introduce long termism without actually determining the exact amount of salaries, which may amount to too much interference. The last option, and perhaps the most workable, is for shareholders to clamp down on management and force them to make the necessary changes—this is in shareholder interest as they always lose if things go sour.

Obviously, there is no easy solution. But a crisis of this magnitude is often the best way to push for a major change. In India, of course, the financial system, particularly banks, are much more risk-averse. However, this will change as we liberalise our system. It may thus be appropriate for shareholders, managements and the government to begin thinking about the challenges and risks of a more liberal financial system—while the benefits will be enormous, we can ill-afford a US type of meltdown.