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uk regulators on financial regulation June 29, 2012

Posted by Bradley in : financial regulation , trackback

Some highlights from the Bank of England’s press conference about the June 2012 Financial Stability report (the Report is available here):

Mervyn King and Adair Turner agree there is a major cultural challenge especially with respect to investment banking.

King says that Libor should be based on actual market transactions, not on quotes (and that it looks more likely now that this will happen than before the beginning of this week) although he and Turner recognise than there are difficulties in relying on transactions in thin markets.

King and Turner seemed to like the idea of the ECB taking on responsibility for banking regulation, but within the Euro area and not for the entire EU (and the details could be complicated).

The participants seemed convinced of the need to separate out basic banking and investment banking (and that the issues of culture raised by the Libor manipulations are connected to this separation).

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