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Bank of England to Keep FSA as Subsidiary?

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Britain's Finance Minister George Osborne is set to detail plans this week to keep part of the Financial Services Authority (FSA) as a subsidiary of the Bank of England, the BBC reported on Sunday.

" .....in his Mansion House speech to London's financial centre or City on Wednesday, Osborne will set out proposals to keep the part of the FSA which overseas financial markets, as a formal subsidiary of Britain's central bank,

the BBC's Robert Peston said.

 

 

The FSA had faced closure under initial proposals from the Conservative Party -- lead partners in the new governing coalition -- to hand responsibility for dealing with the day-to-day supervision of banks to the Bank of England.

 

source: the BBC

 

But in recent weeks the government has watered down plans to completely abolish the agency, which has just begun to win respect for cracking down on market abuse such as insider trading and for its stepped-up agenda of using its criminal prosecution powers.

As part of the shake up of the way British banks are supervised, a new Financial Policy Committee will be set up within the Bank of England, made up of Bank executives with a direct responsibility for financial stability and senior representatives from the FSA, Peston said.

The committee would have a set of "macro-prudential tools" to stop banks from providing credit to parts of the economy that are at risk and would be responsible for making regulatory decisions affecting the biggest banks and insurers.

Last month, the government reiterated that the Bank of England will become responsible for macro-prudential supervision of banks, a task that was divided between the Bank, the FSA and the finance ministry.

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