Mervyn King, speaking at Mansion House, outlined the role of the Financial Policy Committee and its interaction with the Prudential Regulation Authority (PRA). He looked at how PRA’s focus is different from FSA’s and how successful resolution is key to the new regime. He also stressed the importance of banks holding greater levels of loss-absorbing capital and said he was worried the EU might try to dilute the Basel III requirements in this respect. He said the most tragic failure of regulation had been to think that close supervision could compensate for weak capital requirements in inadequate control on leverage. (Source: Mervyn King Mansion House Speech)