The 138-page document, A New Approach to Financial Regulation: Building a Stronger System, has outlined the structure and remit of the FPC.
The new entity will function as a committee of the Bank of England's court of directors - its governing body - and will be responsible for delivering systemic financial stability through 'macro-prudential' regulation.
The FPC will have a specific remit for monitoring areas of systemic risk. The Treasury proposes that the FPC will be tasked to look out for weaknesses in the structural features of financial markets that make the system vulnerable to adverse shocks.
These include information problems, misaligned incentives such as remuneration arrangements in certain areas of banking, market illiquidity, contagion, evidence of systemically important financial institutions and inadequate market infrastructure.
According to the proposals, the FPC will "exercise its functions with a view to contributing to the achievement by the Bank of England of the financial stability objective.
"The responsibility of the FPC relates to the identification and monitoring of, and taking of action, to remove or reduce systemic risks, in order to protect and enhance the resilience of the UK financial system."
It will work with the Prudential Regulation Authority, which will also operate within the Bank's structure with those other departments responsible for crisis management.
Treasury paper says this will place "the Bank at the heart of the financial system, bringing responsibility for all aspects of financial stability together within the bank group".
Source: http://www.ftadviser.com
The new entity will function as a committee of the Bank of England's court of directors - its governing body - and will be responsible for delivering systemic financial stability through 'macro-prudential' regulation.
The FPC will have a specific remit for monitoring areas of systemic risk. The Treasury proposes that the FPC will be tasked to look out for weaknesses in the structural features of financial markets that make the system vulnerable to adverse shocks.
These include information problems, misaligned incentives such as remuneration arrangements in certain areas of banking, market illiquidity, contagion, evidence of systemically important financial institutions and inadequate market infrastructure.
According to the proposals, the FPC will "exercise its functions with a view to contributing to the achievement by the Bank of England of the financial stability objective.
"The responsibility of the FPC relates to the identification and monitoring of, and taking of action, to remove or reduce systemic risks, in order to protect and enhance the resilience of the UK financial system."
It will work with the Prudential Regulation Authority, which will also operate within the Bank's structure with those other departments responsible for crisis management.
Treasury paper says this will place "the Bank at the heart of the financial system, bringing responsibility for all aspects of financial stability together within the bank group".
Source: http://www.ftadviser.com
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