BBA paper sets out credit crunch lessons

08 October 2007

A worldwide targeted review of financial regulation will help the markets weather the credit crunch, according to a paper published by the British Bankers' Association. The position paper calls for immediate reviews of regulation in the UK and internationally, including the regulatory treatment of:

 

- liquidity risk management;

- complex credit products and off-balance sheet vehicles such as conduits and Special-purpose Investment Vehicles or SIVs;

- accounting and valuation practices for complex financial products;

- credit rating agencies; and

- deposit protection arrangements.

 

"However uncomfortable it may be, we must tackle the question we are increasingly hearing from the international community about the credit crunch and the Northern Rock affair”, BBA Chief Executive Angela Knight said. "The architects of the UK system of tripartite regulation have questions to answer and the international financial community has clear lessons it can learn from the mistakes that were made. This paper is a contribution to both of these processes."

 

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© Graham Bishop