No surprises in banking white paper
Mon, 13 Jul 2009
Proposals for the reform of the British banking system announced by Alistair Darling last week were as expected, according to one expert.
Tony Dolphin, senior economist at the Institute for Public Policy Research, said there were few surprises in the report, which focuses on the risks financial firms can present to the economy and greater protections for consumers.
New powers for the Financial Services Authority (FSA) are planned, to place higher capital requirements on firms that present greater risks to the system, while measures to deal with the potential failure of institutions that could have a significant impact on the economy have also been unveiled.
In addition, a national money guidance service is to be launched to help consumers make better informed choices, while a strengthened framework for financial stability will also be enforced.
Mr Dolphin said the Chancellor had chosen to keep the main elements of the tripartite system with the Treasury, the Bank of England and the FSA intact, with the latter assuming a degree of power to assess salaries.
However, the measures announced are unlikely to prevent further difficulties in the future, he warned.
Mr Dolphin added: "There really isn't in there any sort of clarity on what the FSA or the Bank of England will do differently in the future, if it will provide the occurrence of some of the problems we have had.
"There's talk of monitoring the system more, but there is nothing in there which tells us what the Bank of England can do, if they can go out and stop banks doing things, or not."
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