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Bank of England to unveil "fresh approach" to regulation

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The Bank of England is set to unveil its new principles-based approach to regulating banks and larger financial institutions this week.

The Daily Mail reports the regulatory model set to be employed by the new Prudential Regulation Authority will be set out at a conference at the QE2 Centre in Westminster tomorrow.

The report suggests the PRA will move away from “box-ticking” regulation to a more principles-based approach.

It says the new regulator will rank the capital, solvency, quality of loan book, conduct of business and liquidity of individual banks at five different levels.

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Readers' comments (5)

  • The Bank of England is set to unveil its new principles-based approach to regulating banks, for the first time ever the FSA will now regulate banks!

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  • So who will determine the 'quality of the loan book'? As I understood it, the quantification of risk was the real problem. The banks themselves, their auditors, the regulators and the credit-rating agencies - supposedly expert professionals - all failed to understand the level of risk to which the banks had exposed themselves. I haven't heard anything since then to convince me that they have any better methods now. How will they overcome the problem of money that is 'lent on' You may think you know the credit worthiness of your creditor - but that depends to an extent on the credit-worthiness of the person/institution that they have lent the money to. How do you combat the domino effect in a world of increasing interdependence and complexity?

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  • A fresh approach would require the current staff at the FSA to be sacked.

    We will get the shuffling of deckchairs on the Titani approach e.g. change the name on the door approach. Otherwise the RDR would be scrapped as it's the FSA's idea of this rubbish.

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  • Hector Sants said you can't have principles based regulation for people who have no principles.

    What has changed?

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  • Quantification in practice means the central bank handing over notes to the commercial banks to finance extravagant expenditure or loans to defaulting debtors. The theory is different.

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