Bank of England proposes ‘more British style’ of financial regulation

General view of the Bank of England in London, Britain, October 22, 2021. REUTERS/Tom Nicholson/File Photo

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LONDON, Sept 8 (Reuters) – The Bank of England said on Thursday it would switch to a “more British style of regulation” for the country’s huge financial services sector as it seeks to capitalize on Brexit.

The BoE’s Prudential Regulation Authority (PRA), which oversees the stability of banks and other financial firms, has released a working paper outlining its policymaking proposals now that Britain has left the European Union.

“The move to a more British style of regulation, with technical rules set by regulators rather than set out in law, will enable us to deliver strong prudential standards in a way that is proportionate, supports competitiveness and is relevant to the British market,” said BoE Deputy Governor Sam Woods.

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The proposals come as Britain’s new Prime Minister Liz Truss has promised to “really free” the City of London by making the most of Brexit for the 164 billion pound ($188 billion) financial sector.

Newly appointed Finance Minister Kwasi Kwarteng met finance chiefs including the heads of global banks HSBC (HSBA.L) and Barclays (BARC.L) at the Treasury on Wednesday to outline the government’s economic approach. Read more

Kwarteng told executives he wanted a “Big Bang 2.0” for the sector focused on a regulatory overhaul to boost growth and competitiveness, according to two sources briefed on the discussions.

Chief executives of Lloyds and NatWest (NWG.L), as well as regional heads of Wall Street giants Goldman Sachs (GS.N) and JP Morgan (JPM.N) were also in attendance, some virtually. Kwarteng is due to meet JP Morgan chief executive Jamie Dimon today. Read more

Former finance minister Rishi Sunak has also promised a ‘Big Bang 2.0’ for the industry – a reference to the deregulation of equity trading in the 1980s that boosted London’s growth.

City bosses said that has largely not materialized, with London catching up with rival global financial centers since Brexit. Read more

Truss’s new ministerial team has signaled its intention to take a closer look at the BoE – with more regular meetings and a promised review of the regulatory role of the PRA as well as other financial watchdogs – raising concerns about the threats to its independence. Read more

Kwarteng gave his full support for the independence of the Bank of England at Wednesday’s meeting, the Treasury said.

The BoE said on Thursday that the PRA would continue to be driven by the pursuit of strong standards and be proactive in its approach to its secondary objective of competitiveness and growth.

The central bank said it was seeking comments on its future policymaking approach to be submitted by Dec. 8.

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Reporting by William Schomberg and Iain Withers; Additional reporting by Sinead Cruise, Lawrence White and Carolyn Cohn; edited by David Milliken and Elaine Hardcastle

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