BANKS are not like other businesses. For banks, confidence is their most important asset. They take deposits from the public and lend out multiples of that money, often in the form of long-term loans, such as mortgages.Confidence matters because banks are not in a position to call in those loans all of a sudden, so the business of banking relies on depositors trusting that their money can be safely left with the banks.Any move that erodes confidence in the banking system, or certainty about the policy framework that governs the system, is dangerous, because it can prompt a run on deposits that can bring down individual banks, or infect the system as a whole.It’s tempting to be entertained by the rather mad string of events that began last week with the mineral resources minister’s announcement on the banks and ended with the Cabinet repudiating his statement. It is tempting, too, to find hope in the pitched battles that seem to be waging within the government and the governing party...
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