BoE and FSA warned over liquidity

24 October 2011

The Bank of England (BoE) and the Financial Services Authority (FSA) have been warned about the severity of new regulations regarding bank liquidity.

Andrew Tyrie, chairman of the UK parliament's Treasury Committee, has written to the two bodies in an effort to ensure the impact of these rules on bank lending does not serve to hamper the country's economic revival.

The industry figure urged the organisations to take a close look at their practices in this area, as restricting monetary flow to companies could have a significant impact on any recovery.

Mr Tyrie - who has been voted The Spectator's Backbencher of the Year by leading UK journalists on two occasions - claimed the eurozone crisis was already providing a sizeable hurdle to financial institutions looking to raise funding.

He added: "The squeeze on bank liquidity is running the risk of continued credit contraction setting back the prospects of economic recovery."

By Tony Aynsley

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