No, leave aside what the regulations should be for a moment and think about who should be designing them and how.
The men are concerned about \”maximum harmonisation\”, an idea gaining traction in Brussels, which will see national rule books applying the same standards in areas such as capital and liquidity requirements.
Mr Sants said: \”Within the European Commission there is discussion about standardising rules.
\”In other words, national regulators could not allow banks to go above or below the European standard… all we would be doing is policing European fixed standards.\”
Ah, no, that\’s not the way we should be going. Recall what we had under El Gordo. A set of rules adminstered by the FSA. Written, firm, rules, with bureaucrats ticking boxes.
Did that work? No, it didn\’t did it?
What we actually want to return to is the old system of Bank of England regulation. One where, while there are of course rules, there are also unwritten rules. Where it is possible for the regulator to call people in and say \” that\’s not on\”. For that\’s the only way that regulation can be done in something as fast moving as finance.
Local regulation by local people for local markets.
UK regulatory bodies such as the PRA, which are designed to apply a forward-looking, judgment-based style of muscular regulation, could be left weakened.
Exactly. So bumping the rule making up to EU level is exactly the wrong thing to be doing.