–Adds Detail To Version Transmitted At 1154 GMT
London (MNI) – UK Chancellor of the Exchequer George Osborne
outlined Wednesday his plans for reform of the regulatory system, with
the Bank of England to play a key role and to take responsibility for
An independent commission is being set up, headed by former Bank of
England chief economist John Vickers, to look into the future of
Osborne’s statement in parliament comes ahead of his keynote speech
later Wednesday. Further details of the planned reforms will be
published Thursday and the Vickers’ commission will look at how to
advance regulation in future.
“On the structure of regulation our plan is to hand over to the
Bank of England the responsibility for macro-prudential supervision.
That should never have been taken away from it (by the former
government),” Osborne said.
Osborne noted that there was an ongoing international debate over
how to conduct macro-prudential supervision. He said he was hoping for
“firm conclusions on capital and leverage requirements” by the time of
the upcoming G20 summit in Seoul.
He gave his backing to the idea of counter cyclical capital
requirements for banks.
“It is already clear that the tools for this include capital
requirements that work against the cycle rather than with it,” Osborne
“The coalition government is also committed to handing to the Bank
of England responsibility for the oversight of micro-prudential
regulation. It is clear that the central bank needs to have a deeper
understanding of what is going on,” he added.
A Treasury minister will give further details of the institutional
arrangements for the new regulatory system to parliament Thursday.
Osborne said BOE Governor Mervyn King was due to talk to the BOE
supervisory body, the Court, later Wednesday to inform it of the
Osborne said Vickers would approach the issue of regulatory reform
with “an open mind”.
Vickers was on the BOE’s Monetary Policy Committee from June 1998
to September 2000.
In later comments in parliament, Osborne responded to a question
about the BOE by saying he was not proposing to change its current
inflation targeting regime.
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