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20/12/2011
Government Endorses Major Banking Reforms
The Chancellor of the Exchequer has endorsed proposals by an independent commission into banking calling for a major overhaul to the UK banking sector.
In a response to the report on Tuesday, George Osborne said he agreed with the recommendations from the Independent Commission on Banking (ICB) headed up by Sir John Vickers, which called for "ring fencing" between the retail and investment banking arms of banks.
Mr Osborne said: "Banks borrowed too much and took on risks they did not understand.
"When the bubble burst, these banks turned out to be 'too big to fail', and the last Government had to spend billions of pounds bailing them out."
The Chancellor went on to say that it was important to know that the ringfence would not prevent banks from failing but it did mean if banks get into trouble, those elements of the banking system vital for families and businesses can continue without resort to the taxpayer.
Mr Osborne also confirmed that banks must now hold more capital in reserve to absorb losses, with the proposals initially requiring banks to hold a minimum of 17% of the monies on loan in reserve.
Responding to the proposals on Monday afternoon, Ed Balls said in the House of Commons that it was vital the Government now implemented the important banking reforms without backsliding, foot dragging or watering them down.
He added that his party supported the commission’s radical reforms on ring-fencing and regulatory standards.
(DW)
In a response to the report on Tuesday, George Osborne said he agreed with the recommendations from the Independent Commission on Banking (ICB) headed up by Sir John Vickers, which called for "ring fencing" between the retail and investment banking arms of banks.
Mr Osborne said: "Banks borrowed too much and took on risks they did not understand.
"When the bubble burst, these banks turned out to be 'too big to fail', and the last Government had to spend billions of pounds bailing them out."
The Chancellor went on to say that it was important to know that the ringfence would not prevent banks from failing but it did mean if banks get into trouble, those elements of the banking system vital for families and businesses can continue without resort to the taxpayer.
Mr Osborne also confirmed that banks must now hold more capital in reserve to absorb losses, with the proposals initially requiring banks to hold a minimum of 17% of the monies on loan in reserve.
Responding to the proposals on Monday afternoon, Ed Balls said in the House of Commons that it was vital the Government now implemented the important banking reforms without backsliding, foot dragging or watering them down.
He added that his party supported the commission’s radical reforms on ring-fencing and regulatory standards.
(DW)
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