The decision by US, UK and Swiss bank regulators to slap fines on five leading banks on allegations of rate rigging in foreign exchange markets is a step in the right direction. It illustrates that the regulators mean business and banks will have to toe the line when it comes to adhering to due diligence and ethical behaviour.
The fine of $3.2 billion (Dh11.75 billion) seems steep enough. The crucial question, however, is will the banks actually realise that they cannot operate as a law unto themselves? In that context, fines should have been coupled with bringing unscrupulous bankers to book. Will the banks that have been named and shamed — for twisting the market for excessive gains — now mend their ways? Introducing new regulations and levying steep financial penalties will not change anything.
The core of the problem lies in the system and that needs to be put under closer scrutiny. As long as there is money to be made, bankers will always be greedy. Exemplary punishments meted out to individuals are the answer. The system has to be reformed at the root and not just on the surface.