The Bank of England will be given responsibility for rescuing failing banks in the future. Alistair Darling, the bank’s chancellor declared that the Treasury Select Committee of the bank should be put in charge of the forthcomming regime for rescuing banks.
The government is consulting on its plans, which will become law next year. It decided to bring in a new system to help ailing banks in the wake of the Hortnern Rock collapse last year.” The reforms to banking regulation, which I set out in my Mansion House speech, will strengthen the role of the Bank of England in relation to financial stability,” Darling said.
He added that the new legislation will change the role of the bank and within that, the deputy governnor for financial stability, including giving him a leading role in dealing with failing banks through the new special resolution regime.
The international credit crunch, and its knock-on sffects on both the United Kingdom, UK, economy and irs banking system, are regarded by the authorities as the worst problem the UK financial system has faced for at least the past two decades. To improve financial stability, and to stop any more banks facing a run on their funds by their savers, like the Northern Rock, other change will be made.