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6 Mar 2013
BoE’s King: UK banks too big to fail
BoE governor Mervyn King testified on Wednesday on banking standards before the Parliamentary Committee in London. He said that UK banks were still too important to fail and that the UK Prudential Regulation Authority should address the issue.
He nevertheless admitted that "the unknown question is whether the powers that we've been given will in fact be adequate to get rid of the too-important-to-fail problem.”
The central bank governor also referred to the bank bonus cap, discussed yesterday at the Eurogroup meeting, saying that he doubted that this regulation would be effective. All the same, he also added that it shouldn’t have such a damaging impact as some fear, but that it would rather serve as a distraction when more important matters will require solving.
As far as bank restructuring is concerned, Mervyn King said: "It's four and a half years on and there is no immediate sign of it going back to the private sector. So I think that means that we have not been sufficiently decisive in either recapitalizing the banks or restructuring them."
He nevertheless admitted that "the unknown question is whether the powers that we've been given will in fact be adequate to get rid of the too-important-to-fail problem.”
The central bank governor also referred to the bank bonus cap, discussed yesterday at the Eurogroup meeting, saying that he doubted that this regulation would be effective. All the same, he also added that it shouldn’t have such a damaging impact as some fear, but that it would rather serve as a distraction when more important matters will require solving.
As far as bank restructuring is concerned, Mervyn King said: "It's four and a half years on and there is no immediate sign of it going back to the private sector. So I think that means that we have not been sufficiently decisive in either recapitalizing the banks or restructuring them."