FXStreet (Mumbai) – Speaking at the CityUK Chairman’s dinner on Tuesday, Bank of England (BOE) policymaker Jon McCunliffe noted that stress testing the banking system should be more strict in ‘boom times’ when credit and risks surge, and more flexible or softer in weaker times.
Key Quotes:
“Given the depth and complexity of the financial crisis and the corresponding depth and complexity of the reforms, we should expect rather than be surprised that we will need to refine and adjust some of the regulatory reforms.”
He added, BOE may need to refine the reforms in the years to come as the “the implementation of the detailed reforms will inevitably throw up unforeseen effects in particular places, and where it is justified, we will need to revisit issues.”
“Rather than testing every year against a scenario of constant severity, the severity of the test, and the resilience banks need to pass it, would be greater in boom times when credit and risk is building up in the financial system and it has further to fall and then reduced in weaker periods when there is less risk in the system and the economy needs the banking system to maintain lending,” McCunliffe concluded.
(Market News Provided by FXstreet)