Tuesday, 1 May 2012

UK: Financial regulation - a quartet of speeches

Perhaps it is the season for speeches. Four have caught my eye. The first began with the words "Elephant seals have got too big for their beaches" and is another interesting and informative speech by Andrew Haldane, the Executive Director for Financial Stability at the Bank of England, in which he considered some of the negative consequences of competition: see here (pdf). The second speech, by David Lawton (the Acting Director of the Markets Division at the Financial Services Authority) was titled Liquidity and the Regulation of Markets: see here. Mr Lawton highlighted current developments concerning the regulation of liquidity and concluded, amongst other things, that whilst liquidity was an important element in a well-funcitoning market it was not a regulatory goal in itself.  Other goals were foremost - including integrity, resiliency, efficiency and investor protection - when designing measures to enhance market confidence.

The next two speeches considered shadow banking. The first, titled Shadow Banking: Thoughts for a Possible Policy Agenda, was delivered by Paul Tucker, a Deputy Governor at the Bank of England: see here (pdf). Mr Tucker argued, amongst other things, for greater transparency and recommended that shadow banking vehicles or funds sponsored or operated by banks should be consolidated on bank balance sheets. The final speech was delivered by Lord (Adair) Turner, the Chairman of the Financial Services Authority, and was titled Securitisation, Shadow Banking and the Value of Financial Innovation,: see here (pdf). Lord Turner sought to identify how financial innovation should be valued and how it differed from innovation in other sectors of the economy. Amongst other things he cautioned against the belief that increased size in the financial sector was a desirable end per se. (It's also worth noting that Lord Turner's book, Economics After the Crisis: Objectives and Means was published last month - further information here).

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