View more on these topics

Flexibility call to change rules to suit situation

Bank of England deputy governor for financial stability Paul Tucker wants to reserve the right to change the rules on issues such as capital requirements at different stages in the credit cycle.

At a conference held by thinktank Reform in London last week, Tucker set out the types of macroprudential tools that the bank will need to ensure financial stability.

He said that the first tool needed would allow the bank to look across the financial services sector and spot where small issues for individual financial institutions present a greater risk when assessed as a whole.

Tucker said: “We also need a tool that allows us to vary requirements through the credit cycle. We cannot assume that we have the right set of rules now for every single state that the world will find itself in in the future.”

He added that having the flexibility to adapt rules would mean the bank can be held to account if the current rules of the day are not effective.

He said: “If we are to exercise discretion, then society and Parliament and the European market will need to understand what we have done and why and say that was a mistake for the following reasons. This would keep the public debate alive on these issues.”

Last year, Bank governor Mervyn King used his annual Mansion House speech to call for additional powers to maintain financial stability.

King said it was not entirely clear how the central bank would be able to discharge its responsibility for financial stability if it could do no more than “issue sermons or organise burials”.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com