Retail banks to be ring fenced

Graham_Devon

Seems the EU doesn't like the proposals...

European Union ministers, especially French and German finance ministers, are trying to restrict the powers available to the UK's new Financial Policy Committee, which has its first meeting today.

That was a warning - in not very coded form - given last night in the Mansion House speech by the Chancellor, George Osborne.

A new European Union Capital Requirements Directive, as currently drafted, would make the new 7% ratio of equity capital to assets, set out in the Basel III global agreement, the maximum ratio that regulators in Europe could impose on banks.

This, according to Treasury sources, would make it impossible for the FPC to force British banks to hold more capital, as a protection against losses and to slow down lending, as and when the FPC spots a new bubble, such as a renewed and worrying boom in the housing market.

The FPC, which will be part of the Bank of England and will sit alongside the Monetary Policy Committee that sets interest rates, is supposed to identify incipient dangers in markets of the sort that led to the great crash of 2007-8. And the FPC is also supposed to have the tools to reduce or eliminate these risks (see my note of Monday for more on this).

According to a Treasury source, there has been a "big row" on the European finance ministers committee, Ecofin, about this, with Mr Osborne and the Swedish finance minister pitched against their German and French counterparts.

http://www.bbc.co.uk/news/business-13789813

Thrugelmir

Graham_Devon wrote: »

Seems the EU doesn't like the proposals...

http://www.bbc.co.uk/news/business-13789813

If Greece defaults then German and French banks will be exposed ........

So hardly surprising that they are against.

However would give the UK banks credence in the money markets if a 10% requirement was introduced.


On today's news its a question of when Greece defaults.

grizzly1911

Thrugelmir wrote: »

If Greece defaults then German and French banks will be exposed ........

So hardly surprising that they are against.

However would give the UK banks credence in the money markets if a 10% requirement was introduced.


On today's news its a question of when Greece defaults.

Re - introduce is probably closer to the mark.

All this proposed control will just take us back, quite rightly IMO, to the more stable, banking times.

I can still remember having too "book" exposure against enforced limits particularly against property related caps in the 90's.

It will be interesting to see if the UK will win out on this one we have followed the previous BASEL dictats.

reeac

Conrad wrote: »

A lot of my self employed clients detest the fact some people seem to expect them to work for little.

It's called competition - that's what makes capitalism work. Self-employed people should understand that.