Bank of England - White Papers

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This page lists the White Papers from the Bank of England that focus on the Bank's financial reform structure.

A New Approach to Financial Regulation: The Blueprint For Reform - June 2011

From the white paper: Sitting within the Bank of England, the Financial Policy Committee will make judgments about risks to the overall stability of the financial system, and offer advice, recommendations, or binding directions to ensure that these risks are dealt with. Also within the Bank of England, the Prudential Regulation Authority will make judgments about the safety and soundness of individual firms, and will take supervisory and regulatory action to ensure that firms take necessary steps. And the Financial Conduct Authority will make judgments about risks to consumer protection, competition and market integrity and have new powers to take action. This clarity of focus will mean that accountability – to Parliament, the Government, and to the wider public – is clear.

To tackle these issues, the Government has announced, and is delivering, a number of targeted policy responses:

  • the Government has announced a radical reform of the UK regulatory framework to correct the failings that became apparent through the financial crisis;
  • an interim Financial Policy Committee has been established to begin monitoring systemic risk and advise the Government on potential macro-prudential tools;
  • the FSA and Bank of England have begun the process of splitting out prudential from conduct of business regulation, within the FSA, as a precursor to the establishment of the new regulatory structure;
  • the Government has established an Independent Commission on Banking to consider what steps should be taken to deal with systemically important banks, alongside the question of whether and how competition in the banking sector should be improved;
  • the Government has introduced a levy to encourage banks to move to less risky funding profiles, and to ensure that banks make a fair contribution in respect of the potential risks they pose to the UK financial system and wider economy; and
  • agreement has been reached with the largest UK banks on lending and remuneration.
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A New Approach to Financial Regulation: Judgment, Focus and Stability - July 2010

From the white paper:

The financial crisis exposed the inherent weaknesses in the ‘tripartite’ system of regulation in the UK. Perhaps the most significant failing is that no single institution had responsibility, authority or powers to oversee the financial system as a whole. Before the crisis, the Bank of England had nominal responsibility for financial stability but lacked the tools to put this into effect; the Treasury, meanwhile, had no clear responsibility for dealing with a crisis which put billions of pounds of public funds at risk. All responsibility for financial regulation was in the hands of a single, monolithic regulator, the Financial Services Authority, and there was clearly, in the run-up to the financial crisis, too much reliance on ‘tick-box’ compliance. 1.5 To tackle these issues, the Government has announced, and is delivering, a number of targeted policy responses:

  • the Government has announced a radical reform of the UK regulatory framework to correct the failings that became apparent through the financial crisis;
  • an interim Financial Policy Committee has been established to begin monitoring systemic risk and advise the Government on potential macro-prudential tools;
  • the FSA and Bank of England have begun the process of splitting out prudential from conduct of business regulation, within the FSA, as a precursor to the establishment of the new regulatory structure.
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References

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