7 May 2012

UK Government Advised To Reform Financial Sector

Sir Mervyn King (Bank of England Governor) has proposed to the UK Government to implement a reform on the financial sector in order to prevent a possible banking crisis. The main argument is that Banks have borrowed and made widely available too many financial solutions for everyone. Furthermore, it was also argued that Banks have a requirement to be recapitalised as quickly as possible.

A new Financial Policy Committee (FPC) as part of the Bank of England will be in operation to regulate the London City next year. However, the proposal by the Bank of England Governor is to bring the Independent Commission on Banking’s recommendations so that Banks must adhere to a separation of their retail services to their casino-style investments.

Sir Mervyn stated: “The Bank’s new Financial Policy Committee will have the power to step in and prevent a hangover by taking away the punchbowl just as the party in the financial system is getting going.  That won’t make us popular among bankers, politicians and even at times some of you, and it’s not supposed to.  But it will, I hope, reflect the trust and confidence that the citizens of this country can place in the Old Lady of Threadneedle Street.”

The concerns are that the present crisis is “far from over”, as the eurozone debt crisis has been demonstrating on a weekly basis.