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Former Barclays Boss Admits Regulation is Required

Wed, 17 Mar 2010

Former Barclays boss Sir Martin Taylor has told the Future of Banking Commission that greater regulation of the banking industry is required as banks are incapable of imposing the necessary reforms to protect against a future crisis. Sir Martin acknowledged that any reforms that introduced greater regulation would likely attract significant opposition from the City, but said that such reforms were necessary to guard against a repeat of the current credit crunch.

One proposed reform being considered is the narrow banking idea, whereby consumer savings accounts are protected if a bank goes under as a result of taking too many risky. Bank of England governor Mervyn King has voiced his support for the idea at an earlier Commission hearing, though chief executive of the Royal Bank of Scotland, Steven Hester, this week rejected the idea, claiming that there was no evidence that 'narrow banks' were less likely to go bust than 'wider banks'.

Banks have yet to engage in a competitive battle for savings market share, with interest rates still low on savings accounts and ISAs after the Bank of England brought the base rate to a record low.
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