UK’s new banking act gives BoE more powers

UK has passed a new banking act:

The Banking Act provides a permanent and appropriate regime for the resolution of failing banks. It is a major step forward in the Government’s ongoing programme to strengthen stability and confidence in the UK banking system, in the wake of the global instability experienced by financial markets in the last eighteen months. I am particularly grateful to the contribution of the expert liaison group of industry participants in developing these proposals.”

The documents related to the Act are here.

Interestingly, they have also placed a report which analyses cost-benefit analysis of the new bill.

Costs of the Bill: GBP 2.2 mn – 4.5 mn
Benefits: GBP 3.6 mn – 5.1 mn

I am still going through the document. The media helps explain the act. BBCIHT. Telegraph has a neat explanation by outgoing BoE Deputy Governor John Gieve:

On Saturday the first provisions of the new Banking Act brought into force a new and permanent Special Resolution Regime (SRR) under which the Bank of England has been given a central role. The Act also gives the Bank of England for the first time a statutory objective to promote financial stability, working in cooperation with the FSA and the Treasury.

The SRR is a last resort. It will be triggered only if the FSA decides that a bank is failing or is likely to fail its threshold conditions and has no reasonable prospect of remedying that position. At that point, the Bank of England will choose between a range of options including the transfer of the whole or part of the business to a commercial purchaser directly or through a bridge bank, which would be a subsidiary of the Bank of England.

3 Responses to “UK’s new banking act gives BoE more powers”

  1. UK’s new banking act gives BoE more powers « Mostly Economics | Money Blog : 10 Dollars : Money Articles. Says:

    […] Read the original: UK’s new banking act gives BoE more powers « Mostly Economics […]

  2. Loans Says:

    Nice info! Very cool post.I have looked over your blog a few times and I love it.

  3. Sabine McNeill Says:

    Dear Blogger,

    The magic of WordPress has sent me to your very interesting entry from http://edm1297.wordpress.com/2009/09/07/petition-on-national-banking/

    Looking forward to reading more,

    Sabine
    Organiser, Forum for Stable Currencies

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