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MPs to consider Glass-Steagall banking model

The Treasury select committee will be questioning whether banks should be broken up for the good of the public early next year.

The MP committee is looking for evidence to be able to investigate whether financial institutions are ‘too big to fail’ and whether they should be reduced in size. In doing so it will look at the pros and cons of separating low-risk banking from high-risk financial activities.

It has also asked for evidence to be able to debate the pros and cons of alternative methods of preventing financial institutions from being ‘too important to fail’ through capital requirements, ‘living wills’ and taxation.

The committee will be questioning whether the structure of the current financial system should be reformed, and certain activities regulated, on the grounds of systemic risk.

It will also question the extent to which banks operating in the UK are interconnected and the relationship between size and risk, and business models.

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