(Richard Drew/AP)

When danger looms, cortisol levels typically rise, and for short periods this is beneficial since this sharpens our defensive instincts. But, if there is a period of long, unpredictable stress, cortisol levels become elevated. That can impair cognitive analysis and promote irrational pessimism and risk aversion. Mr Coates attributes the behaviour of financial markets in late 2008 and 2009 to an excess of cortisol.

Then there is the vagus nerve. Traders who are physiologically healthy have so-called good “vagal tone”, meaning their heart rate and adrenalin levels fluctuate sharply, rising in a crisis, but then (crucially) falling back. Traders whose functions have become impaired lose vagal tone. Their bodies and minds remain in a constantly “stressed” state...

[Coates] wants banks and regulators to monitor traders’ biology; after all, he says, it would not be hard to install heart monitors, or blood tests in banks, to spot hormonal swings.

He also suggests hiring more women and older men as traders, as they have lower testosterone--which he calls the “irrational exuberance hormone”--and fewer cortisol swings.