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Darling says restricting bank size is not the answer

Chancellor Alistair Darling has said that restricting the size of banks is not necessarily the answer to preventing future economic crises.

Speaking at Mansion House in the City of London last night, Darling said large banks must not assume that Governments will always bail them out.

He said: “The solution is not as simple, as some have suggested, as restricting the size of banks.

“We have learnt that you don’t necessarily need to be a big bank – or indeed a complex one – to threaten to bring the system down.

“You cannot remove all risk. But you can try to understand where the risks lie.”

The Chancellor also stressed that banks must focus on long-term wealth creation and not short-term profits.

He said that Governments and regulators also need to learn lessons from the crisis and said that transparency is paramount.

Darling announced that next week he will set out a new tax code for how the banks can meet their obligations.

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