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10 November 2022

The Policy Ask with Jon Danielsson: “The government should ditch financial regulation that protects big incumbents”

The co-director of the Systemic Risk Centre on fair market competition and why we need a better system for training and apprenticeships.

By Spotlight

Jon Danielsson is co-director at the London School of Economics’ (LSE) Systemic Risk Centre. He holds a PhD in economics from Duke University and is currently reader in finance at LSE.

How do you start your working day?

With a double espresso, checking my emails.

What has been your career high?

I am not one for thinking about the past, so for me it’s always the latest success – in this case, publishing my book The Illusion of Control this summer, which is about why financial crises happen and what we can (and can’t) do about them.

What has been the most challenging moment of your career?

It tends to be when I have to do five hours of lectures in one day, as I am this term. Standing on my feet and teaching our students all the intricacies of risk forecasting is very rewarding but also very hard.

If you could give your younger self career advice, what would it be?

Don’t worry, do what you think is best and everything will turn out OK. I used to have a tendency to overthink problems and have learned it is best to be more relaxed and enjoy life more.

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Which political figure inspires you, and why?

Konrad Adenauer, the first chancellor of the Federal Republic of Germany (West Germany), from 1949 to 1963, who was pivotal in rebuilding the country after the Second World War. He took over a broken country twice defeated in a world war and built a modern successful democracy – one that is a model for the world.

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What policy or fund is the UK government getting right?

Its higher education policy – we have the best universities outside of the United States. We tend to criticise our higher education system, and there is certainly plenty of room for improvement. However, the rest of the world looks at us as a model. Our universities are well funded, relatively unbureaucratic and focus on both high-quality teaching and research. They therefore deliver world-leading research and education, and other countries aspire to our system.

And what policy should the UK government ditch?

Financial regulations that protect the big incumbents and prevent start-ups from entering the market. Our financial regulators are quite unwilling to allow new types of financial institutions to set up shop. They prefer the old business models over the opportunities afforded by technology.

What upcoming UK policy or law are you most looking forward to?

I am looking forward to seeing whether the reform of financial regulations now under way will succeed or whether it will be hijacked by those with special interests who don’t want any changes. I am cautiously optimistic.

What piece of international government policy could the UK learn from?

Germany’s apprenticeships and training system for students who decide not to go to university. Here in the UK, young people are directed to university, but 50 per cent don’t get to go. It would be much better for them and the UK as a whole if they received proper training. In this area, Germany is world-leading and we should learn from it.

If you could pass one law this year, what would it be?

A law that forces the financial regulators to be much more willing to quickly grant licences to new innovative firms, especially those working with state-of-the-art technology. Our economy would prosper and the stability of the financial system would increase. A win-win for all except the incumbents.