Britain Mulling banking reforms

Published January 31, 2008

LONDON, Jan 30: British finance minister Alistair Darling on Wednesday outlined proposals for a radical reform of banking regulations to prevent another Northern Rock-style crisis.

Northern Rock was nearly sunk by a severe funding crisis last September when it was forced to request emergency assistance from the Bank of England due to a credit squeeze on world financial markets.

News of the bail-out triggered the first run on a British retail bank in living memory as panic-stricken customers rushed to withdraw their cash.

Chancellor of the Exchequer Darling, launching a consultation document on Wednesday, said that the Bank of England could offer secret financial help to failing banks to prevent another run on a crisis-hit institution.

In the future, the Bank of England could also delay disclosure of any emergency assistance, according to a statement from Darling’s powerful Treasury department.

The plans would be aimed at “reducing the likelihood of banks facing difficulties,” the statement said. They would also seek to reduce “the impact if ... a bank gets into difficulties.”

Darling said on Wednesday that “recent months have seen a period of sustained turbulence and instability in global financial markets, with financial firms across the world affected.“The government is determined that its response is proportionate and appropriate, and will therefore consult actively on these proposals.” As part of a three-month consultation, the Treasury is also seeking guidance on whether it should remove the requirement for a company receiving liquidity assistance to disclose this publicly.

Bank of England governor Mervyn King who was reappointed for another five-year term on Wednesday has repeatedly lamented the fact that the British central bank cannot make covert lending operations to banks in need.

The Treasury has also proposed that the so-called “tripartite” structure of financial regulation -- comprising the Treasury, the Bank of England and the Financial Services Authority watchdog -- should be maintained.—AFP

Opinion

Revival? For whom?

Revival? For whom?

Numerous sets of numbers, not quoted by govt sources, suggest that things are not as dazzling as claimed by those who run the country.

Editorial

Premature alarm
Updated 20 Feb, 2025

Premature alarm

Improvement in headline inflation gives policymakers chance to fix investment policies, implement structural reforms.
Forsaken province
20 Feb, 2025

Forsaken province

AND the endless cycle of violence continues. The brutal killing on Tuesday night of seven Punjab-bound passengers in...
In poor health
20 Feb, 2025

In poor health

THE absence of decent and affordable healthcare in the country continues to ruin lives. An example of this is ...
Out of control
Updated 19 Feb, 2025

Out of control

AS bodies continue to fall in Kurram despite a state-sanctioned ceasefire, one wonders how long local militants’...
Hollow words
19 Feb, 2025

Hollow words

IT is not uncommon for politicians to resort to the use of hyperbole in order to boost their public standing. ...
Migration matters
19 Feb, 2025

Migration matters

THE grass, it seems, did appear greener on the other side to millions of people as evidenced by the latest UN ...