Tuesday June 30, 05:49 PM
UPDATE 1-BoE and FSA to both get new powers-UK Tsy's Myners
LONDON, June 30 (Reuters) - Both the Bank of England and the Financial Services Authority will get new powers to help prevent future crises, Treasury minister Paul Myners said on Tuesday.
And he said the government would publish
its paper setting out its thinking on the future of financial regulation next week.
Finance minister Alistair Darling has said Britain's tripartite system where regulatory responsibility is shared by the Treasury, the BoE and the FSA will be kept in place.
But with more powers up for grabs, a turf war appears to have opened up between the FSA and the central bank with BoE Governor Mervyn King making waves this month by saying he had not been consulted on the government's reforms and that he should not be blamed if anything goes wrong.
'There is no simple solution; no obvious answer. That is why we need to have an open and honest debate about the shortcomings of the past and the new challenges we face,' Myners said.
'Given the significance of the changes in global financial markets we will need to look at giving both the FSA and the Bank of England additional responsibilities and powers.'
The FSA said whatever the final supervisory set up, its constituents needed to work more closely.
'First it is clear that there needs to be a very close relationship between central banking activities and the regulation and supervision of banks,' its chairman, Adair Turner, told a British Bankers' Association conference.
'In the years running up to the crisis, there was an insufficiently close relationship,' Turner said.
'In future, alongside more intense supervision, and more effective regulation, we need a commitment to build deeper working relationships between whatever are the different institutions involved in the full spectrum of activities from macro-prudential regulation through to consumer protection,' Turner said.
Mark Hoban, a member of the opposition Conservative party in the UK parliament, said responsibility for macro prudential regulation should rest with the Bank of England.
The party, which is tipped to win the next election due by June 2010, is mulling whether to set up a 'twin peaks' system of supervision, making the central bank responsible for all prudential oversight, leaving a much reduced FSA.
'Changes can only be made if those would improve financial stability and reduce the risk of another financial crisis. One thing is clear, whatever the outcome of the process of reform we can't allow micro prudential regulation to be lost in the system,' Hoban said. Keywords: BRITAIN REGULATION/MYNERS
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