Bank of England's top 5 proposals for regulatory reform

inspector_monkfish

00:01 26Jun09 FACTBOX-Bank of England's top 5 proposals for regulatory reform

LONDON, June 26 - The Bank of England set out proposals for regulation of the financial services industry on Friday to avoid a repeat of the current financial crisis.

Following are the five key areas where the BoE said reform was needed in the June 2009 issue of its twice-yearly Financial Stability Report.

1. Stronger market discipline
- making banks put in place plans to allow regulators to shut them down if needed without causing financial market panic
- funding deposit insurance via risk-weighted insurance premia
- more disclosure of volatility in banks' portfolios
- improved cross-border crisis management

2. Greater self-insurance
- higher levels of capital, consisting solely of equity
- counter-cyclical capital requirements, ie requiring banks to build up reserves in good times to draw down on in bad
- larger liquidity reserves consisiting of government bonds
- reduced reliance on ratings agencies
- regulating money market funds with a constant net asset value as banks

3. Improved risk management for whole financial system
- systemically important financial institutions should have higher capital requirements than similar non-systemically important financial institutions
- controls on economy-wide lending booms
- more use of central counterparties and exchanges to clear and trade securities, rather than banks dealing directly with each other
- greater international cooperation to avoid imbalances in national current accounts

4. Banks should not be too big or complex
- limits to the number of legal entities a bank is made of so that it is easier for regulators to understand and wind up

5. Clear principles for public safety nets
- governments should publish clear rules before a crisis hits for providing emergency capital and liquidity

geoffky

Just on channel five news that the fsa are to ban financial advisers from charging commission...how will the poor dears eat?:rotfl:

Thrugelmir

inspector_monkfish wrote: »

00:01 26Jun09 FACTBOX-Bank of England's top 5 proposals for regulatory reform

LONDON, June 26 - The Bank of England set out proposals for regulation of the financial services industry on Friday to avoid a repeat of the current financial crisis.

Following are the five key areas where the BoE said reform was needed in the June 2009 issue of its twice-yearly Financial Stability Report.

1. Stronger market discipline
- making banks put in place plans to allow regulators to shut them down if needed without causing financial market panic
- funding deposit insurance via risk-weighted insurance premia
- more disclosure of volatility in banks' portfolios
- improved cross-border crisis management

2. Greater self-insurance
- higher levels of capital, consisting solely of equity
- counter-cyclical capital requirements, ie requiring banks to build up reserves in good times to draw down on in bad
- larger liquidity reserves consisiting of government bonds
- reduced reliance on ratings agencies
- regulating money market funds with a constant net asset value as banks

3. Improved risk management for whole financial system
- systemically important financial institutions should have higher capital requirements than similar non-systemically important financial institutions
- controls on economy-wide lending booms
- more use of central counterparties and exchanges to clear and trade securities, rather than banks dealing directly with each other
- greater international cooperation to avoid imbalances in national current accounts

4. Banks should not be too big or complex
- limits to the number of legal entities a bank is made of so that it is easier for regulators to understand and wind up

5. Clear principles for public safety nets
- governments should publish clear rules before a crisis hits for providing emergency capital and liquidity

5 years too late. Knew about NR in 2004.