Sunday 22 October 2017

Carney warns on regulatory let-up amid signs decade of crisis is ending

Bank of England governor Mark Carney
Bank of England governor Mark Carney

Scott Hamilton

Ten years on from the start of the financial crisis, Mark Carney came close to declaring victory in the long campaign to repair the "fault lines" that caused the global meltdown.

The Bank of England governor, who is also head of the globally-focused Financial Stability Board (FSB), reeled off regulators' accomplishments.

They included better-capitalised banks, reduced risk of big public bailouts, a thorough reform of the derivatives markets and a decline in the most dangerous activities of so-called shadow banking.

One of the biggest threat to all these achievements, he said yesterday, is "reform fatigue".

He warned the leaders of Group of 20 countries, due to meet in Hamburg on Friday, that if their commitment to implementing global standards slips, this could "erode the willingness of G20 members to rely on each other's systems and institutions and... fragment pools of funding and liquidity, create inefficiencies and frictions, reduce competition and diminish cross-border capital and investment flows."

Mr Carney, whose term as head of the FSB ends later this year, devoted his annual report to laying out the successes of the global response to the crisis and to a call for the remaining work to be completed.

Outstanding tasks including reaching a deal on finishing the Basel III capital framework and addressing possible risks posed by the growing asset-management industry.

With talks in the Basel Committee on Banking Supervision caught in a deadlock between European banking powers and the US, Mr Carney called on G20 leaders to "insist on the timely completion" of negotiations.

He said this would "lock in the benefits of a resilient international banking system, equipped with the regulatory certainty to lend and invest, supported by a level playing field of consistent international standards".

Meanwhile, on his own home patch, Bank of England facilities staff voted to go on strike over pay in the first action of its kind at the central bank in 50 years, according the Unite union.

Ninety-five percent of Unite's members in maintenance, security and the private offices of senior officials at the BoE - known as the Parlours - backed industrial action between July 31 and August 3.

Unite called on Mark Carney to personally intervene and said it may escalate the plan if management fails to resolve the disagreement.

Wages and staff morale have long been issues at the BoE.

The latest row has been caused by management granting weaker-than-inflation pay rises for the past two years, with the overall annual wage bill projected to rise by only 1pc from March 2017, according to Unite.

The BoE said staff that participated in the Unite ballot made up about 2pc of its workforce, and that it has plans "so that all sites can continue to operate effectively". (Bloomberg)

Irish Independent

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