Wednesday, 19 September 2012

UK: financial regulation reform - consultation on the FPC's macro-prudential tools

HM Treasury has set out, for the purposes of consultation, its proposals concerning the macro-prudential tools to be given to the Financial Policy Committee under the new financial regulatory framework: see here (pdf). The Government proposes to give the FPC: [a] responsibility for setting the level of the UK's counter-cyclical capital buffer (as set out in Basel III and the European Commission's CRD IV proposals); [b] the power to impose sectoral capital requirements; and [c] a time-varying leverage ratio direction-making tool (but not earlier than 2018). The paper also seeks views on whether other tools should be available to the FPC, including those relating to liquidity and LTV and LTI ratios.

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