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Economy

Financial stability proposals published

Written by Adrie van der Luijt

Wednesday, 30 January 2008

A consultation on proposals for strengthening the current framework for financial stability and protecting depositors has been launched by the Chancellor of the Exchequer.

The consultation document is published jointly by HM Treasury, the Financial Services Authority and the Bank of England – the “Tripartite Authorities”.

Following the recent period of turbulence and instability in global financial markets, the consultation document sets out the Tripartite Authorities' proposed action, both in the UK and internationally, to achieve five key objectives:

strengthening the stability of the financial system, both in the UK and globally;
reducing the likelihood of banks facing difficulties;
reducing the impact if, nevertheless, a bank gets into difficulties;
providing effective compensation arrangements in which consumers have confidence; and
strengthening the Bank of England, and ensuring effective coordinated actions by authorities, both in the UK and internationally.

Launching the consultation document, the Chancellor of the Exchequer, Alistair Darling, said, "Recent months have seen a period of sustained turbulence and instability in global financial markets, with financial firms across the world affected. A response to these episodes required action, not only from the UK authorities, but also from international firms and institutions."

Darling added that the Government is determined that its response is proportionate and appropriate and that it will therefore consult actively on these proposals, seeking discussions with financial institutions, consumer representatives and counterparts from across the world, to ensure that the final arrangements are effective and deliver the five objectives.

He said that the Treasury Select Committee's report published on 26 January about the fall-out from the Northern Rock crisis had informed the proposals.

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