By Vivienne Russell
09 July 2009
A new financial watchdog is to be set up to monitor financial stability and respond to emerging risks under measures set out in the banking white paper.
The Council for Financial Stability would preserve the tripartite regulation system established by the government in 1997 when it granted independence to the Bank of England.
It would bring together the Treasury, the Bank of England and the Financial Services Authority.
Chancellor Alistair Darling told MPs on July 8: ‘Our central objective must be to ensure that, as we come through the downturn, we reform and strengthen our financial system and rebuild it for the future – with consumers who are better informed, financial institutions that are better managed and markets that are better regulated.’
But the Conservatives criticised the proposals as ‘more a white flag than a white paper’.
Shadow Chancellor George Osborne said Reforming financial markets represented a ‘complete surrender of this government’s responsibility to fix the system of regulating the City that it created and which so spectacularly failed’.
He said the tripartite regime had become ‘dysfunctional’ and was riven with ‘institutional jealousies’, adding: ‘Blurred lines of responsibilities means that everyone is involved but no one is in charge.’
Liberal Democrat Treasury spokesman Vince Cable said the government had ‘failed to send a message to the banks that excessive risk-taking and bonuses are simply unacceptable’.
The white paper also proposes new powers for the FSA to place higher capital requirements on financial institutions that place a greater risk on the system.
09 July 2009
A new financial watchdog is to be set up to monitor financial stability and respond to emerging risks under measures set out in the banking white paper.
The Council for Financial Stability would preserve the tripartite regulation system established by the government in 1997 when it granted independence to the Bank of England.
It would bring together the Treasury, the Bank of England and the Financial Services Authority.
Chancellor Alistair Darling told MPs on July 8: ‘Our central objective must be to ensure that, as we come through the downturn, we reform and strengthen our financial system and rebuild it for the future – with consumers who are better informed, financial institutions that are better managed and markets that are better regulated.’
But the Conservatives criticised the proposals as ‘more a white flag than a white paper’.
Shadow Chancellor George Osborne said Reforming financial markets represented a ‘complete surrender of this government’s responsibility to fix the system of regulating the City that it created and which so spectacularly failed’.
He said the tripartite regime had become ‘dysfunctional’ and was riven with ‘institutional jealousies’, adding: ‘Blurred lines of responsibilities means that everyone is involved but no one is in charge.’
Liberal Democrat Treasury spokesman Vince Cable said the government had ‘failed to send a message to the banks that excessive risk-taking and bonuses are simply unacceptable’.
The white paper also proposes new powers for the FSA to place higher capital requirements on financial institutions that place a greater risk on the system.
