MercoPress, en Español

Montevideo, September 29th 2023 - 17:54 UTC



UK unveils plan to prevent repeat of a Northern Rock run

Thursday, January 31st 2008 - 20:00 UTC
Full article
BoE will demand more information from banks on their  financial health BoE will demand more information from banks on their financial health

The British government unveiled plans this week to give authorities the power to swiftly seize control of a failing bank as part of an overhaul of banking laws to prevent a repeat of the run on mortgage lender Northern Rock PLC.

The Treasury Office also proposes to give the Bank of England the right to grant emergency loans to struggling institutions in secret, and to give the Financial Services Authority the right to demand more information from banks on their financial health. The government has been under pressure to come up with tighter regulation since Northern Rock fell victim to the global credit crisis last summer, and the proposed laws would put Britain closer in step with US banking regulations. "Recent months have seen a period of sustained turbulence and instability in global financial markets, with financial firms across the world affected," Treasury Chief Alistair Darling said. "A response to these episodes requires action, not only from the UK authorities, but also from international firms and institutions." The government will discuss the plans with both British and international financial institutions and consumers over the next three months before it drafts legislation to introduce to Parliament. Currently the UK has a tripartite system to deal with emergencies with the Financial Services Authority working together with the chancellor and the Bank of England, but is has been criticized for having failed to prevent the first run on a UK bank for more than a century. Another chapter refers to what amount of bank deposits should be protected. At the moment savers have the first £35,000 in each account guaranteed. This week Prime Minister Gordon Brown met in London with his French, German and Italian counterparts to discuss global market turmoil and called on the IMF and other institutions to monitor risks better. The leaders warned that if the finance industry did not address these concerns they would consider imposing regulatory measures. "We need a better early warning system for the global economy" said PM Brown following the meeting in 10 Downing Street. "We want the prompt and full disclosure of the write-offs that are now to take place as soon as possible; I think these are the immediate things people want to be done," Mr Brown said.

Categories: Economy, International.

Top Comments

Disclaimer & comment rules

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!