gordon brown says stronger bank regulation not enough

The Prime Minister, Gordon Brown, this weekend said that the economic and social contract between society and the banking sector needed to be renewed.  Capital and other regulatory requirements were not sufficient and he called for new proposals to be considered.  CSM is arguing for an additonal measure; separating banking functions.

Speaking at the G20 summit in St Andrews, Scotland, Gordon Brown highlighted proposals "for a banks insurance fee to reflect systemic risk or a resolution fund or contingent capital arrangements or a global financial transactions levy."  The last proposal refers to the Tobin Tax, the subject of a CSM fringe event at this year's Labour Party conference.

Brown stated that the new proposals would have to be considered against four core principles.  Measures would have to be global; avoid distortions in financial markets; they should complement and reinforce action already being taken to restore financial stability; and any contribution from the financial sector must be "fair, measured and enable financial services to make their necessary contribution to future economic growth."

CSM officer Stephen Beer, who has argued for a banks insurance premium, commented "It's good to see these proposals being considered by the international community and the IMF.  There is one proposal missing however.  That is to separate banking to prevent 'casino' style investment banking from threatening to take down the whole financial system again.  Retail banking needs to be protected.  CSM will continue to press for this option to be considered.  The risks of another financial crisis demand it - especially because it is the poor who suffer most from a banking crisis."