Andrew Bailey warned the Chancellor that plans to remove banking regulations risk destabilizing the UK financial system and could lead to a financial crisis. He stated that now is not the time to unwind safeguards like bank ringfencing, which separate riskier investment banking from retail banking. Bailey expressed concern that some policymakers overlook the ongoing risks to financial stability. Recent statistics revealed that UK government interest payments reached £16.4 billion in June, alongside a £20 billion borrowing increase. Bailey explained these trends reflected global market phenomena rather than UK-specific issues.
Andrew Bailey emphasized the importance of retaining banking regulations, stating that unwinding safeguards like bank ringfencing could destabilize the UK’s financial system and create risks akin to the 2008 financial crisis.
Bailey acknowledged policymakers might feel the past financial crisis is behind, however, he stressed that "there remains a live threat to financial stability" necessitating robust regulations.
Recent data from ONS indicates that UK government interest payments surged to £16.4 billion in June along with significant government borrowing of £20 billion, which exceeded forecasts.
Bailey described the current situation surrounding UK interest rates as part of a global trend, pointing out that the increase in term premiums and yield curves is not unique to the UK.
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