FSA has published Lord Turner’s review of global banking regulation and a discussion paper giving more detail of some of its recommendations. The Review covers:
- the underlying causes of the financial crisis;
- the importance of a system-wide macro-prudential approach to regulation and supervision; and
- areas where it is premature to take action but which need consideration.
The review lists 32 actions required to create a stable and effective banking system, grouping them between:
- capital adequacy, accounting and liquidity;
- institutional and geographic coverage of regulation;
- deposit insurance;
- UK bank resolution;
- credit rating agencies;
- CDS market infrastructure;
- Macro-prudential analysis;
- FSA supervisory approach;
- firm risk management and governance;
- utility banking versus investment banking;
- global cross-border banks;
- European cross-border banks; and
- open questions for further debate.
While Lord Turner makes some recommendations for specific change, more often he gives options and arguments for and against their implementation. For more detail on the Review, please see our separate article.
The Discussion Paper that accompanies the Review tracks most of the issues the Review covers. It is open for comment until 18 June. It discusses the issues FSA believes must be addressed and how to address them. FSA stresses it is not pre-judging the outcome of the Review. The paper asks 38 specific questions on aspects of the paper, ranging from whether respondents agree with FSA’s suggestions to asking for comment on whether FSA has missed any important points.