Background
When it came into office, the Government asked the Independent Commission on Banking to recommend ways to strengthen the resilience of the banking system and promote competition. In June this year the Government published a white paper setting out how it would implement those recommendations.
But banks are only part of the financial system. Other types of financial institution can also pose a risk to financial stability, if there is no way for them to fail safely. And the disorderly failure of ‘financial market infrastructures’ – networks that connect market participants to each other – could also severely disrupt both financial markets and the normal functioning of the wider economy.
The Government is therefore publishing today a consultation on proposals to ensure that if parts of the financial system other than banks run into trouble, they can fail in a way that does not threaten financial stability, without requiring taxpayer support. The consultation focuses on investment firms and financial holding companies, ‘central counterparties’ that place themselves in between two parties to certain financial transactions, other financial market infrastructures (such as payments systems), and insurers.
Consultation
The consultation “Financial sector resolution: broadening the regime” seeks views on the proposals and questions set out in consultation document. This will help shape the design of the policies that the Government ultimately takes forward.
The Government is interested in feedback from all stakeholders including the firms and infrastructures directly covered by the consultation, but also their customers, owners and members, trade bodies, and all other stakeholders who have an interest in financial stability.
Consultation document
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