Banking Regulation Shake Up to be Announced

Banking Guides

Banking FAQ's

Finance Quick Links

Other Finance Guides

Site Information

Financial Services > e-banking > Banking news

Banking Regulation Shake Up to be Announced

Wed, 08 Jul 2009

The Treasury will today publish plans for a shake up of the banking regulation system, with a new committee expected to be announced. The committee will be comprised of members from the Bank of England and the Financial Services Authority (FSA) and will be charged with the task of calming lending booms and stimulating lending during recessions. Significantly, the committee will be able to control the amount of money that banks and building societies are able to lend. This represents an important shift from the free market policies that have dominated the banking system and loan market in recent decades.

Experts have said that the new committee is far from ready to be implemented, however, with the Bank of England, the FSA and the Treasury disagreeing over the powers that should be available to the committee. Analysts have put forward the two most likely outcomes.

The first would see banks lending capped to a proportion of the amount of capital they hold. This limit could be altered depending on the state of the economy, but would help to ensure no repeat of the current crisis.

A cap could also be imposed on how much they can lend to each individual. The cap would limit banks to lending housebuyers a proportion of the borrowers income, whilst another possibility would see the committee given powers of taxation to impose on loans to restrict lending in a boom.

Link to this page

Banking news
Banks failing on online fraud says MPs report - Tue, 05 Apr 2011
Lloyds TSB is to change the interest rates on its Vantage current account - Thu, 31 Mar 2011
Contactless debit cards from Lloyds TSB - Tue, 29 Mar 2011
More News