The head of Britains financial watchdog on Wednesday outlined large-scale reform of the way banks and other institutions are policed in the wake of the problems exposed by the global credit crunch. Financial Services Authority (FSA) chief Adair Turner said "major changes" were required and pledged more intensive supervision as he launched a review into financial regulation in Britain.
"The changes recommended are profound and the banking system of the future will be different from that of the last decade," Turner told reporters. "The worlds economy will be better served as a result." He added that, had his proposed reforms been in place a decade earlier, "we would not have had this financial crisis."
The reviews recommendations include "fundamental changes" to rules on how much liquidity a bank must maintain, more and higher quality bank capital, and regulation of so-called "shadow banking" institutions such as hedge funds and also of credit ratings agencies. Turner said the FSA must also change its approach, focusing on systemic risks rather than internal processes, while a new European regulatory body would be needed along with increased powers for national regulators.
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