Osborne gives BoE new powers and unveils bank tax

| June 17, 2010

In his first Mansion House speech last night, Chancellor George Osborne confirmed that the Bank of England will hold the main role in regulating the UK financial sector.

The move was widely expected and comes as City Watchdog, the Financial Services Authority (FSA), will “cease to exist in its current form”, said the Chancellor.

The transition, which is expected to be completed by 2012, will be supervised by FSA Chief Executive, Hector Sants, who had been due to leave this summer.

The new measures are intended to prevent another credit crisis after the FSA was the subject of some criticism for not doing enough to prevent or limit the crisis in the financial markets.

“No one was controlling levels of debt, and when the crunch came no one knew who was in charge,” said Mr Osborne.

He said the Government would create a powerful new Financial Policy Committee at the Bank of England.

“What we are proposing is a new system of regulation that learns the lesson of the greatest banking crisis in our lifetime.

“We will create a new prudential regulator, which will operate as a subsidiary of the Bank of England,” he said.

Meanwhile, Mr Osborne also confirmed there would be a bank tax and he will “demand further restraint on pay and bonuses”.

The Bank of England‘s Governor, Mervyn King, welcomed the changes. He said: “Monetary stability and financial stability are two sides of the same coin. During the crisis the former was threatened by the failure to secure the latter.”

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  1. Kerry Davies says:

    So the chancelloor will “demand further restraint on pay and bonuses” will he?
    What kind of English does Mr Osborne spek when pay and bonuses have rocketed this past year? If that is an example of existing restraint then God help us all.