How do banks work?, bbc.co.uk: Finding by the Editorial Complaints Unit

Complaint

The item was a video extract from a BBC3 programme directed at a young audience.  In the video, the BBC’s Business Editor sought to explain, in appropriately simplified terms, the principles of banking and the role played by banking in relation to the global credit crunch.  A viewer complained that it gave a misleading impression of the way banks work (by failing to note their role as creators of credit) and of the causes of the global financial crisis.

 

Outcome

Though highly simplified, the item did not give a misleading impression of the immediate causes of the global credit crunch (as distinct from the period of extensive lending which preceded it).  In relation to the principles of banking, however, it was simplified to the point of suggesting that the amount a bank could lend was limited to the sum of its deposits.  This left a misleading impression of how banks in fact work, and of the impact of the working of banks on the economy at large.

Partly upheld

 

Further action

The video was removed from the website following the ECU finding.