Bank of England may lack bandwidth to aid competitiveness, says policymaker

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LONDON — The Bank of England may not have enough resources to implement an extra objective of maintaining Britain as a competitive global financial center, a policymaker designate said on Monday.

Britain’s government is due this week to unveil a draft law to exploit post-Brexit “freedoms” to set its own financial rules.

But lawmakers have signaled skepticism about giving regulators a secondary competitiveness remit, fearing it could mean returning to “light touch” regulation that ended with banks being bailed out over a decade ago.

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“The standards that the UK currently holds are, I think, highly regarded internationally,” said Marjorie Ngwenya, the finance ministry’s pick as new external member at the Bank of England’s (BoE) Prudential Regulation Committee (PRC).

The PRC takes the most important decisions for the BoE’s Prudential Regulation Authority (PRA), whose top priority is to keep banks and insurers safe and protect policyholders.

“I am not clear at this point whether the PRA has sufficient resources to be able to consider that new objective,” Ngwenya told a confirmation hearing with parliament’s Treasury Select Committee.

The draft law could also give the ministry powers to require regulators to review rules.

“It’s important for regulators to maintain their operational independence, and it’s a well established model in the UK and other jurisdictions around the world,” said Ngwenya, former president of the Institute and Faculty of Actuaries.

“Any reform would need to, in my mind, ensure that this principle isn’t compromised. I don’t think there should be undue pressure on regulators to weaken regulatory standards inappropriately.” (Reporting by Huw Jones Editing by Mark Potter)