FSA liquidity changes could cost banks £9.2 billion year
The Financial Services Authority (FSA) has today come under attack for proposed liquidity changes to the UK banking system. As we covered yesterday, the FSA is looking to introduce more stable assets as collateral for money market transactions and overall balance sheet strength. This would see UK banks forced to acquire more and more assets such as Treasury bonds and other "near cash" investments which would push up the cost of maintaining liquidity for each and every bank in the UK.
The estimated £9.2 billion a year increase which UK banks would face because of these changes is money which could be invested into the industry and into the UK economy. It would appear that in their haste to try and prevent another "Northern Rock" in the future, the FSA may well have become too cautious and overstepped the mark. When you consider that the London financial markets are under extreme pressure at the moment from the EU and other leading markets around the world, to bleed another £9.2 billion a year with no possible investment return is disappointing to say the least.
The main hope for the UK financial industry is that a new Conservative party will win the next general election and install more user friendly regulators to assist with running the industry. Could we see the Conservative Party save the day?
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