President Barack Obama has shaken up the banks with his plans for radical reform just as they seemed to be settling back into their cosy business-as-usual ways, but it’s just a small step in the right direction.

No doubt the banks will respond with warnings over the coming days, weeks and months that regulation of their activities or their remuneration policies would hurt us more than it does them - by damaging our pensions and the tax take.  If we want the financial system to deliver a sustainable future, we should be prepared to pick those arguments apart.  
 
Obama wants to see the banks where you and I put our money prohibited from engaging in certain risky activities, which can make a lot of money in the short term but which can put the their entire finances at risk over a longer time-frame.  He singles out hedge funds, private equity and proprietary trading. 

He is right to try (however difficult it may be) to distinguish between the ‘oil’ that makes the system run smoothly - basic banking services - and the speculative ‘cogs’ that put the system at risk and only create short-term returns for the finance sector itself. 

But the principle could be taken further.  The finance sector's short-term perspective on money-making stores up all sorts of other long-term risks for us as tax-payers and future pensioners, by overlooking factors which will have a major impact on our economies like climate change and the depletion of scarce resources like clean water, fertile soils and forests.  Unless our financial system takes these risks into account, and begins to value these assets better, the system will collapse and our 'wealth' will collapse with it.  This needs to be part of the conversation. 
    
The discussions on financial reform provide an opportunity to shine a light on the sector's activities. Which parts deliver value for shareholders and the wider public in a stable and sustainable way and are required for the system to run smoothly?   Which only serve to create short-term returns for the finance sector itself? 

If we can have an open debate of this kind, we may emerge with a financial system that manages risk, values the things that matter and provides capital to the activities that can deliver a sustainable future.

Read more about Forum for the Future’s work to create a sustainable financial system.