Treasury has published a paper looking at cross-border challenges in financial stability and depositor protection. It plans some international initiatives as well as its current UK actions:
- to strengthen the stability and resilience of the financial system following FSF reform plans;
- to use and complement the Lamfalussy arrangements by regulating and supervising financial markets and institutions. It is critical for regulators to cooperate cross border and ensure they oversee efficiently cross-border financial infrastructures;
- to reduce not only the likelihood but also the impact of a bank failing. International rules should support effective resolution of bank failures and finance ministries, central banks and supervisors should all be involved;
- to provide effective compensation arrangements and improved contingency arrangements for handling compensation if a cross-border bank failure happens; and
- to improve co-ordination.
Treasury stresses it sees no benefit to a European authority to deal with these issues as they are global. What is needed is global co-operation.