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Pastimes : The Hot Button Questions:- Money, Banks, & the Economy

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From: maceng26/26/2009 7:33:17 AM
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BoE: Banks still vulnerable

investmentweek.co.uk

The Bank of England has warned banks are still vulnerable and could slip back into trouble should there be any further shocks to economic or financial sector stability.

The warning follows the BoE's bi-annual financial stability report which also sets out five areas where it intends to strengthen policy in the wake of the ongoing financial crisis.

As well as identifying areas in which the sector will need to tighten policy, the BoE has warned banks are still very highly leveraged and remain sensitive to economic and financial shocks which could in turn affect economic recovery and flow back to the banking system.

"The policy debate now underway matters enormously if we are to achieve a more stable financial system in the future. No particular initiative will be sufficient by itself," says Paul Tucker, BoE deputy governor, financial stability.

"Greater resilience will need to be based on a variety of measures, some of which are discussed in this report as a contribution to the wider national and international debate."

The five policy areas discussed in the report are: strengthening market discipline, greater self-insurance by institutions, improved management of risks arising from interactions among financial institutions, size and structure of the financial system compatible with maintaining financial stability and principles for future support from public authorities.
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