The former Archbishop of Canterbury has challenged the assumption that people who borrow money always have a moral responsibility to pay it back.
Rowan Williams said that repayment of debts is not a “moral absolute” as banks and other lenders have failed in their moral responsibility in lending funds.
Dr Williams said the global financial system has repeatedly “ignored and sidelined in every possible way” the principles on which much of the Western world's moral code is based.
He took teachings from Leviticus in the Old Testament which says that lenders should not “seek profit from another’s misery” or take something the borrower needs, such as shelter, for collateral.
Leviticus further teaches that lenders should not allow the gap between creditor and debtor to widen uncontrollably.
"We are so focussed on the ethics of repaying debt but we've ignored the fact that to lend is a decision and therefore has moral questions that can be asked around it", he said.
He also noted that “a great deal of the debt problem has to do with aggressive lending”.
This principle, he said, could apply to the payday lenders as much as to the global financial system.
He cautioned that he was not calling for all borrowers to feel that they can ignore their debts with impunity and the principle of ‘pay what you owe’ must be observed, but lenders nevertheless have a responsibility to control the circumstances so that the borrower does not suffer a “deeply damaging long-term effect”.
So in circumstances where the loan was made without proper consideration of the borrower - for example where money is lent by creditors in the full knowledge the borrower cannot ever pay it back and will instead pay off interest indefinitely - then the creditor must take some responsibility, too.
"There's a justice question there," he said. "[Creditors] are taking a risk and that risk has to be acknowledged somewhere."
