UK Announces Banking Regulation Reform

After many months of uncertainty and speculation, the British Government is finally set to announce their plans on reforming the financial system to protect against future crises.

Chancellor of the Exchequer, Alistair Darling recently made a statement in parliament as to the details of the intended changes, which are to try to “tough up the regulatory system” in their attempts to “reduce future risk”.

Many of the details contained in the governments white paper on the reforms are still cloudy, but rival parties such as the conservatives have argued that the details contained within the plans will not go far enough to protect the economy and some analysts have even said that if the government is not careful, it may even make the current recession worse.

These government plans are aimed to build on proposals made by the head of the Financial Services Authority, but many critics are arguing these plans are insufficient to remedy the situation.

Vince Cable of the Liberal Democrats was of the opinion that the government has given away good taxpayers money to companies that may be beyond redemption. As a result, he said that the credit crisis is still underway thanks to the government’s “passive attitudes”.

However, the plans also detail how the government will create a tri party system which aims to divide responsibility during a financial crisis between the Bank of England, the Treasury and also the Financial Services Authority.

Whether or not the plans go far enough to protect against future economic collapse remains uncertain, thanks to the discord which currently exists between the Bank of England and the Government, as the Bank of England staunchly believes it needs more power to regulate banks in the future.

Mervin King – Chairman of the bank was quoted as saying that the bank of England currently only has powers to “preach sermons”.

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