RTTNews - U.K's conservative government would abolish the Financial Services Authority and would hand banking regulation back to the Bank of England if it comes into power next year, party leader David Cameron said Monday.
We will abolish the Financial Services Authority, and will give the Bank of England the power to regulate pay structures, riskiness and complexity and size of all our banks, building societies and other significant financial institutions, Cameron said in London.
He said the British banking system needs deep and wide-ranging reform that matches both the magnitude of the crisis and the scale of the hardship inflicted on the public.
In its White Paper published today, the Party said it will create a Financial Policy Committee within the Bank, working alongside the Monetary Policy Committee, which will monitor systemic risks, operate new macro-prudential regulatory tools and execute the special resolution regime for failing banks.
The Financial Policy Committee will include independent members in order to bring external expertise to bear on the problem of maintaining financial stability. It will include the Governor and the existing Deputy Governor for Financial Stability, who also sit on the Monetary Policy Committee, in order to ensure close coordination between monetary and financial policy.
Moreover, the Conservatives pledged to make the Bank of England responsible for macro and micro prudential regulation of all banks, building societies and other significant institutions, including insurance companies.
To carry out micro-prudential role, the Party says it will create a new Financial Regulation Division of the Bank headed by a new Deputy Governor for Financial Regulation. The work of the Financial Regulation Division will be overseen by the Financial Policy Committee to ensure close coordination between macro-prudential and micro-prudential regulation. The Deputy Governor for Financial Regulation will also be a member of the Financial Policy Committee.
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