Financial Regulatory Forum

It's closer across the Atlantic

 (Updates with more quotes, details from report)

LONDON, Feb 12 (Reuters) – Britain and the United States are more convinced of the need to force banks to hold more capital than some big European nations, Bank of England Governor Mervyn King told the Council for Financial Stability last month.

The minutes of the meeting between the BoE, the Treasury and the Financial Services Authority on Jan. 14, published on Friday, showed King felt the task of getting nations to agree to stricter rules for banks “should not be underestimated”.

The G20 group of developed and emerging nations has been looking at ways to strengthen regulation after the credit crisis but there have been concerns that a show of unity at the height of the crisis may fall apart as the global economy recovers.

FSA Chairman Adair Turner told the meeting that, while Britain had pushed hard to implement internationally-agreed standards for remuneration in the financial sector, others were dragging their feet.

The minutes showed the FSA had forced some banks to change their pay plans and said “potential issues could arise if other countries failed to follow the UK’s implementation of the Financial Stability Board code in time for the 2010/11 remuneration round”.

Options open

By Sumeet Desai and Matt Falloon

LONDON, Feb 10 (Reuters) – The Bank of England may have to pump more money into Britain’s fragile economy, Governor Mervyn King said on Wednesday after the central bank forecast inflation would stand well below target in two years.

Presenting the BoE’s quarterly Inflation Report, King said recovery from the worst recession since World War Two would be slow with output below pre-crisis levels for some time to come.

And that gloomy outlook did not even take into account the likelihood of fiscal policy being tightened hard after an election expected on May 6.

By Tim Castle

LONDON, Jan 26 (Reuters) – Radical reform is needed to make the banking system safer, Britain’s top central banker said on Tuesday, adding U.S. President Barack Obama’s plan to curb some activities would not fully solve the “too big to fail” problem.

Bank of England Governor Mervyn King said there was no “silver bullet” to solve the banking sector’s problems, and tinkering with regulation alone, such as bumping up capital and liquidity requirements, would not be enough when “stuff happens”.

Radical reforms were also needed to change the liability structure of the banking system, so creditors can’t simply walk away unscathed when a bank fails, King said.

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –

By Edward Hadas

LONDON, Jan 20 (Reuters Breakingviews) – Some crises lead to the solution of an underlying problem. Mervyn King, the governor of the Bank of England, pointed out in a speech on Tuesday that the recent financial mess has as yet done nothing of the sort.

The problem in question is the accumulation of foreign currency assets. Those pile up — like a brick tower built without mortar — whenever cross-border trade is unbalanced. As of 2008, the world’s high-saving countries were adding bricks at an annual rate of $1 trillion, about 2 percent of global GDP.

    LONDON, Oct 21 (Reuters) – Bank of England Governor Mervyn King said a fundamental rethink of banking sector regulation was needed to prevent a recurrence of the financial crisis and floated the idea of splitting core aspects of banking from riskier speculative activities.  (more…)

    LONDON, Sept 24 (Reuters) – Britain’s economy is showing signs of recovery, but any improvement is likely to be small compared to the sharp drop in output caused by the global financial crisis, Bank of England Governor Mervyn King said in an interview published on Thursday. (more…)

   By Sumeet Desai and David Milliken
   LONDON, Sept 15 (Reuters) -  The Bank of England could cut the interest rate it pays on the reserves it holds for commercial banks to help stimulate lending and nurture what it says will be a gradual economic recovery, Governor Mervyn King said on Tuesday. (more…)

    LONDON, Sept 15 (Reuters) – Below is a full text of Bank of England Governor Mervyn King’s opening statement to parliament’s Treasury Committee. (more…)