Financial Policy Committee holds its first meeting
- 16 June 2011
- From the section Business
The Bank of England's new Financial Policy Committee (FPC) will hold its first quarterly meeting on Thursday.
Its job is to take action if it decides that banks and other financial institutions are taking too much risk.
Bank of England governor Mervyn King has said that the FPC has a crucial role in overcoming "the obsession with detail", which he says is "a hindrance to seeing the big picture".
The FPC will publish its first report on 24 June.
In his annual Mansion House speech, Mr King said that: "Until we find a solution to the 'too important to fail' problem, the size of our banking system will remain too large for the UK taxpayer credibly to support in future".
'Can do better'
At the same event, Chancellor George Osborne called for banks to ring-fence their retail banking operations to protect them from riskier investment banking activities.
He also set out the role of the FPC, to "monitor overall risks in the financial system, identify bubbles as they develop, spot dangerous inter-connections and deploy new tools to deal with excessive levels of leverage before it is too late".
The FPC will look at the whole system, while a new Prudential Regulation Authority at the Bank of England will monitor individual firms.
Earlier in the week, Bank of England deputy governor Paul Tucker told the BBC that the institution could do a much better job of regulating the financial system.
"We can do a lot better job than in the past," he said.
"There were warnings, from this institution, some from the FSA, many from abroad, and yet no one picked up the warnings and ran with them."
BBC business editor Robert Peston said: "Some regard it as slightly odd that the Bank of England's punishment for not preventing the greatest shock in several generations to the stability of the British economy is to be given even more responsibilities."
The Bank of England will have five of its executives on the FPC.
As well as Mr King and Mr Tucker, there will be Charlie Bean, Paul Fisher and Andrew Haldane.
The external members will be Adair Turner, Hector Sants, Michael Cohrs, Don Kohn and Alastair Clark.
One of the people appointed, former CBI boss Sir Richard Lambert, resigned from his post before the committee had held its first meeting.