Reuters Insider - STREAM: BoE’s Carney quizzed by parliament

Fbc Holding

27/11/2013 07:29

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 Source:             Thomson Reuters                                   
                                                                       
 Description:        Governor Mark Carney and other policy makers give 
                     evidence on the Bank of England’s latest inflation 
                     report.                                           
 
 
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Transcript (May be auto-generated)

 If you very much government and -- -- coming to give evidence. This morning we have 
quite a lot of ground tough. My good morning we'll see. Being over meant by the exchanges 
that is just the -- which are sort few minutes of full. About five minutes before 
we went set. Between you and the -- -- -- -- it and you just a for the benefit of 
those who -- -- engines that. Won't say. Ten. Yes. As as the -- aware in the committees 
and in fact the first time I was before this committee committee asked questions 
about -- ratio in the powers of of the banks specifically the FCC. Over it. The exchange 
of letters. Proposes. And -- from. Our perspective my perspective agrees to. -- review 
conducted by the FCC. On an expedited fashion of the implementation. -- leverage 
ratio. Four banks in the United Kingdom. And there's several aspects of this you're 
well familiar about this review it quickly the first is to have a leverage ratio. 
As and our view the view via BC's the -- Bank of England my personal view is that 
they leverage ratio was an integral part. Of the capital framework. Thanks so it's 
absolutely necessary -- as I say in the letter there was if I could pick out one. 
Element that was. Essential to the performance of the Canadian banking system. During 
the crisis it was the presence of the leverage -- the first point is that it's integral. 
To the capital framework and so we need to come to ground on the actual definition 
and calibration arbitration the second point he is that. How delivered ratio should 
vary. With changes in the risk based capital framework. As you are well familiar 
there's two aspects of this the first is with respect to ring -- banks. The independent 
commission on banking recommendations in the second. Is if the FTC review -- powers 
of direction over counter cyclical capital buffer would the leverage ratio. Move 
it proportionate fashion with those adjustments. Our view is it should. In the absence 
of those movements there'll be incentives two game. The system again -- leverage 
ratio was complimentary. Two the -- space. Framework now the third aspect of the 
the letter is to give a sense around the time and if 00 finish with this -- my -- 
-- on the timing for the review. There a couple of important influence. Before the 
FTC finalize its -- recommend recommendations about how to implement the leverage 
issue. The first is in January and in Basel we would expect. The governors and heads 
of supervision -- overseas to Basel committee to come to an agreement on the international 
and international agreement on the definition of leverage ratio. And recommended 
minimum calibration of that leverage ratio obviously knowing how it's defined internationally 
important. Domestically for a level playing field secondly. Internationally as part 
of the agenda of the F that this be very much supported by the bank in the treasury. 
Is to to find what's called going concern loss absorbing capacity. Incident in simpler 
terms although I confess not that much simpler being winnable that something we have 
discussed around this. At this committee on on numerous occasions. And the interaction 
between them available that. And the third element which is the final position that 
they recovered resolution directive. The EU which will you -- and its application 
here he is important. Toward questions around the calibration and application of 
the leverage ratio for the arrangements. Bank as wells of the structure of that enter 
-- group that is relevant there all of those factors should be finalized. Over the 
course of the coming I would say three quarters. The resolution aspect we'll take 
a little longer than an international definition. And so do what we intend to do 
is the FBC. Is to work in parallel with that. Come up with an evidence based and 
well reasoned recommendation to implement. To implement the leverage ratio. And the 
chancellor and we welcome the chancellors that indication that he would. On that 
basis -- the end the FBC -- of direction. -- -- New York respecting the work it expedited. 
You're expecting that it PC. It should be granted this power. Way. We would expect 
that it would be granted in this parliament. Comparable size that well we know you're 
totally talking about somewhere in June. 15. The. Expectation would be that we would 
provide our report I think given the international agenda in the timetable for that. 
We would provide our report our assessment. By as late as this time next year because 
I think particularly. Within a year and then. But. We would expect very quickly thereafter. 
We will be granted that power so. -- -- -- -- Yes the community control problems 
it. That's the timing question. Then there is the substance photography in two. The 
first question is what this review. Is intended to do. You who saying you'll let. 
That this review is about. How old. To operate in this race. That Jesus about questions 
stuff is detonations. Education that partridge to bring it. Without. Others. Two 
major what -- this. That. But -- -- no way indicates that that might be a positive 
team could include. You don't regret this on the contrary. You'll. Basically its 
-- -- mourners. Paraphrase that that period. But. So you. I'm I'm right in thinking. 
That as far as the facts -- -- -- This. Is a done deal. You're right in thinking 
that subject to parliamentary group thank you for the caveat yes. Yes well we re 
we seizes this power is consistent in fact necessary. To properly implement. Robust 
capital for him. Well if I can take into the Charles's. We'll take you to go live 
-- it -- to. This doesn't seem to do -- say I. Correct me if I'm wrong I can -- repeat 
that I -- just seen. These leftist and a few moments ago but this led to say is felt 
tired -- fast -- I've grown -- page to. This is not an appropriate time for -- PCs 
to consider whether. You need institutional. That is what you've just been telling 
me is it. It's the appropriate time for us to consider whether and view of the PC 
I expect. Certainly my personal view is we should. These additional. And but we will 
undertake an evidence based review will make the recommendations. According to that. 
And I am fully confident. That. The very broadly that the evidence will support my. 
I'm confident that other independent members of the -- you compute similar conclusions 
is just. Just the exact if I have -- me like there's a gap between. What is about 
-- what and the others just house. Well one is written how true -- -- I cannot be 
I can speak best to I was in my letter. Any opinions expressed -- And that I -- gossip 
is a question -- leveraging. And I'd tell him to get. The. This. I feel politically. 
-- This would be years have done what would. Making. -- can -- 

War. I think that it is featured in the fifties. An industry. Conference. We talked 
about the size of assistance to. Thrust of that speech was. We don't have anything 
to be -- A big went on to say that don't make it actually. What else. Let this issue 
is needed to stay. The emphasis on the second part of the speech which is exactly 
that point. There's certainly advantages to the financial system but it has to be 
made -- has made me more resilient. In addition to leverage ratio highway to. Other 
aspects there are more. The first relate to a series of measures around -- too big 
to fail. They include implementing. Elements recovered resolution drafted but very 
importantly change in the capital structure of the largest banks. So that. The cost 
of failure is born first by the shareholders and and the management. But then by 
the debt holders innocent in order to capital structure so that institutions can 
be recapitalize. Through the debt structures so that they can. Recover without. Recourse 
to public fu