Reforming financial markets
In the wake of the failure of a number of UK banks and the continuing crisis in the financial markets, Britain’s financial regulatory system is without doubt in strong need of repair. Regulatory oversight is provided by the Financial Services Authority (FSA), the Bank of England and the Treasury, however it could be said that none of these institutions reacted quickly enough to the systemic over-leveraging of banks.
A recent government white paper has proposed three main areas in which this system of regulation needs to change:
- There should be more competition in the banking sector
- Banks should behave counter cyclically, building up capital buffers in the good times that can provided cushioning for the bad.
- Create a Council for Financial Stability that will coordinate the efforts of each of the regulatory branches more efficiently.
Furthermore Alistair Darling, Chancellor of the Exchequer, has guided the FSA on areas to reform; he has suggested banks should be forced to hold more capital and liquid deposits to guard against the type of bank runs the UK has recently witnessed.
The White Paper is currently is consultation.
We urge all those with an interest in the future strength and prosperity of the crucial sector of the UK economy to respond.
We have to ensure that real change is implemented for the benefit of consumers rather than for the benefit of the sectors vested interest (of which there are many).
Left to their own devices we could end up with little or no substantive change which we may live to regret, as well as picking up another hefty tab at some point in the future!
Your point of view is important. Click on the link to the white paper below and find out how to have your say.