UK's Osborne asks BoE to consider new power to rein in banks

Reuters

LONDON, Nov 26 (Reuters) - Britain's finance minister GeorgeOsborne has asked the Bank of England to review whether it needsmore power to restrain the balance sheets of banks ahead of aglobally agreed timetable.

The BoE's Financial Policy Committee has powers to setdirection for regulating Britain's financial system.

But the FPC has no direct power to vary the so-calledleverage ratio or measure of how much capital banks must hold inrelation to their total assets, seen as a key method for reiningin risk taking at big banks.

"Therefore now is an appropriate time for the FPC toconsider whether and when it needs any additional powers ofdirection over the leverage ratio, how it should use thesepowers and how any new powers would fit in with the rest of itsmacro-prudential 'tool-kit'," Osborne said in a letter to BoEGovernor Mark Carney.

Osborne was "open" to the review making recommendations thatthe FPC may need to implement the leverage ratio ahead of aglobally agreed timetable, the letter said.

Britain may need to set a baseline leverage ratio higherthan the globally-agreed 3 percent level, Osborne said.

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