Previously, the Financial Services Authority, provided judicial oversight of the British financial industry. This agency is replaced by a branch of the Bank of England called the Prudential Regulation Authority which will focus on maintaining economic stability. A separate agency called the Financial Conduct Authority will focus on the conduct of commercial and retail banks. The FCA will be headed by Martin Wheatley, who was crucial in investigating the Libor-rigging scandal.
The FSA was originally created by Gordon Brown, then Chancellor of the Bank of England, in 1997 to provide financial oversight. However, about ten years later during the financial crisis, the agency was found to have been insufficient and Brown, then Prime Minister, announced the changes. The FPC was created in 2011 and formalized this year. The article can be found at http://www.bbc.co.uk/news/business-21987829.
It is clear that improved financial regulation is important, that way there are certain institution requirements, restrictions etc, that maintain the system. The U.K. has a stable economy due to its ability to maintain confidence in their financial system and financial stability.
ReplyDeleteWhile there is an obvious need for financial regulations in the UK I think legislators need to present them in a way that still appeals to the conservative bankers which occupies and brings its business to london.
ReplyDeleteThe most productive element of this shift will be the transparency of the Financial Policy Committee. I'm interested to see how this will play out in upcoming years, perhaps it will be an indicator of the shortcomings of the Fed's and the ECB's independence from government.
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