Bank of England Governor, Andrew Bailey, counters MP Rachel Reeves' regulatory criticisms
The Bank of England Governor, Andrew Bailey, has reaffirmed his stance on the ring-fencing regime, suggesting a supportive stance towards maintaining some form of the current system. This comes as the UK government has announced its intention to reform the ring-fencing regime as part of its Financial Services Growth and Competitiveness Strategy.
Bailey's comments appear to be a response to criticism of regulators by Rachel Reeves during her Mansion House speech. The proposed reforms are still under review, with a full report from HM Treasury expected in early 2026.
The Bank of England, via the Financial Policy Committee, continuously monitors financial conditions and maintains a focus on ensuring the resilience of the banking system. This includes maintaining appropriate capital buffers through mechanisms like the countercyclical capital buffer (CCyB). Bailey's stance indicates a commitment to maintaining financial stability while considering changes to regulatory frameworks.
However, Bailey urged caution over a proposed shake-up of the ring-fencing system that separates traditional lending and deposit-taking from riskier investment banking. He emphasized the importance of maintaining financial stability in any reforms to the ring-fencing regime.
Reeves, on the other hand, has promised 'meaningful reform' of the ring-fencing regime, a demand being made by the bosses of major banks who say it is a drag on business. Bailey has stated that he and Bank officials would express their views clearly if they perceive the Treasury going too far in stripping back regulation.
While Bailey favors keeping the ring-fencing rules in place, he also expressed a willingness to work constructively to improve the ring-fencing system. Bailey considers the ring-fencing system an integral part of the banking system and does not believe it should be removed at this point.
The exact nature of the proposed reforms and their impact on businesses are subject to ongoing discussion and review. The reforms, if implemented, could potentially lead to friction between Bailey and the Chancellor, who is seeking to unravel some of the reforms put in place during the financial crisis.
In conclusion, while the Bank of England supports the concept of ring-fencing for financial stability, the exact nature of the proposed reforms and their impact on businesses are still under review. The full report from HM Treasury is expected in early 2026.
Financial stability is a commitment that Bank of England Governor, Andrew Bailey, maintains through his stance on the ring-fencing regime, which separates traditional lending and deposit-taking from riskier investment banking. However, Bailey also acknowledges the need for constructive improvements to the ring-fencing system. Despite this, he expresses caution over proposed reforms, fearing their potential Joeijg to disrupt the banking system. These ongoing discussions and reviews about reforming the ring-fencing regime have also brought forth concerns about its potential impact on general-news, politics, and the broader business world, as some argue that maintaining the ring-fencing rules is a drag on finance and business.
