Response to the Turner review conference discussion paper

Effective change depends on a full understanding of the causes of the financial crisis, the need for specific reforms and the impact remedial measures may have on the wider economy, BBA chief executive Angela Knight said in a letter to the Financial Services Authority chairman, Lord Turner.

Responding to the FSA's discussion paper on systemically important banks, Angela Knight reaffirmed the industry's commitment to effective reform but stressed the need for a cumulative impact assessment on all proposed measures. The letter also stressed:

• a vast amount of work is already being undertaken to strengthen the resilience of the financial system, including substantial increases in capital and liquidity, measures to reduce the impact of bank failure and initiatives to improve intergovernmental and cross-border cooperation;
• international agreement is essential to achieving the goal of global financial stability; and
• there is critical need for an impact analysis linking capital and liquidity costs for banks with the capacity of banks to lend.

The submission also makes the point that the industry fully accepts the need to work with the regulatory authorities to reduce the prospect and potential scale of future government intervention in the banking system. Policymakers need to avoid focusing on regulation to the exclusion of other important policy considerations arising from the underlying macroeconomic causes to the crisis.

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