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09 February 2017

BBC News: Bank warns 'lax financial rules' are a route to failure

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Sir Jon Cunliffe, responsible for financial stability at the Bank of England, has warned against relaxing banking regulation, saying that such a move could damage the global economy.

Sir Jon Cunliffe said that "lax controls" risked undoing progress that had been made since the financial crisis.

"We've made very substantial progress since the financial crisis, increasing the resilience of the financial sector and increasing its ability to support the economy in times of stress both nationally and in Europe and globally, including the US," Sir Jon said.

"Those changes were necessary.

"None of us want to see again the sorts of events we saw between 2007 and 2009 and the costs of those events are still very clear.

"In order to have a resilient financial sector and consistent regulation internationally we need international standards, we need the reforms we have had and it is important we preserve them."

Sir Jon's comments come after suggestions that if Britain did not secure a good trade deal with the European Union following Brexit, the UK could become an offshore tax haven - encouraging businesses and banks to move to the country to avoid tougher regulations elsewhere.

Donald Trump, via an executive order, has also announced there will be a review of the Dodd-Frank legislation in America.

"It is important we have proportionate, highest quality regulation - robust and in line with best international standards," Sir Jon said.

"The UK - in order to be a successful financial centre, you need good regulation, you need robust regulation and you need regulators that have credibility and experience.

"One doesn't become successful as an international centre by having lax standards and by being open to crises and regulatory arbitrage [the use of regulatory loopholes to avoid banking costs]."

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© BBC - British Broadcasting Corporation

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