Vickers Report: Difference between revisions
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Under the ringfencing proposals the capital and the stability of the retail banks would be protected from the claims of creditors of the banks' riskier trading activities. The intention of the proposals is that the retail banks should not require public (taxpayer) rescue again, following any future failures of banks' riskier trading activities. | Under the ringfencing proposals the capital and the stability of the retail banks would be protected from the claims of creditors of the banks' riskier trading activities. The intention of the proposals is that the retail banks should not require public (taxpayer) rescue again, following any future failures of banks' riskier trading activities. | ||
In simple terms the proposals - if effective - would prevent banks from speculating with retail deposits (and from jeopardising their future ability to make small and medium-sized business loans). | In simple terms the proposals - if effective - would prevent banks from speculating with retail deposits (and from jeopardising their future ability to make small and medium-sized business loans). | ||
Revision as of 19:42, 23 July 2016
The report of the UK's Independent Commission on Banking, named after the Commission's chairman Sir John Vickers.
The report's main recommendations include the identification - and partial separation - of:
(i) Retail banking (including retail deposit taking and small business lending); and
(ii) Riskier trading activities in the capital markets (sometimes also known as investment banking).
The partial separation proposed in the report would be implemented by a "ringfencing" structure within the large banks currently undertaking both types of activity.
Under the ringfencing proposals the capital and the stability of the retail banks would be protected from the claims of creditors of the banks' riskier trading activities. The intention of the proposals is that the retail banks should not require public (taxpayer) rescue again, following any future failures of banks' riskier trading activities.
In simple terms the proposals - if effective - would prevent banks from speculating with retail deposits (and from jeopardising their future ability to make small and medium-sized business loans).
The proposals of the Vickers Report are more moderate than a full separation of ownership (as required - for example - under the former US Glass-Steagall Act).
See also
