Darling Speaks On Financial Stability

by Jason Gorringe, Tax-News.com, London

03 October 2007

Chancellor of the Exchequer, Alistair Darling on Monday delivered a speech outlining concerns regarding financial stability and the challenges of globalisation for the UK.

Speaking in the presence of former US Federal Reserve chairman, Alan Greenspan, Mr Darling stated that:

"As the Prime Minister has said, what the current international financial instability shows us is the sheer scale of global change already upon us - and how quickly what happens in one part of the world can affect us all."

"For Britain's part, we face these changes with an economy whose fundamentals remain strong and stable."

However, he continued: "Over the past ten years, the international financial market has changed dramatically: global financial flows have doubled to five trillion dollars, a quarter of global assets are internationally owned."

"Britain has established itself as the centre of this global market, with here the City of London world leading financial services, represented by many of you here today. And we are determined to keep it that way."

He went on to add that: "In this time, the way banks do their business has changed, funding their loans not just from the deposits of their savers but from increasingly innovative instruments and a much wider set of investors. The market is more complex and interconnected and our system must reflect that."

"So too has the way people do their business with their banks changed, putting their money in and out not just through branches but over the phone and the internet. People are better and more informed of any problems as they arise. Confidence matters more than ever, and our system needs to reflect this too, putting in place a system that protects the public interest."

"And recent events show that further reforms are needed. But let's be absolutely clear - We will not rush into heavy-handed reforms that we later regret, a temptation we rightly resisted in the past. It's important to think first and then act."

Mr Darling put forward three major proposals designed to safeguard the British economy, all in line with recent developments from reforms intoduced in Washington D.C earlier this year. These were: implementing the agreement for banking solvency; making more rapid progress on new international regulations on liquidity, which have been in discussion for too long, and now need to be accelerated; and, developing common approaches to increase transparency and prevent risky investments being hidden off balance sheet.

Concluding his speech, Mr. Darling announced: "I have today set out the steps we are taking here and proposing internationally as the platform on which we will all meet the challenges of global change."

"When I deliver my Pre Budget Report and Comprehensive Spending Review I will set out the reforms and investments we will make to equip our country, and support you as business in meeting them."

"Throughout I will take no risks with stability of our economy and ensure Britain plays its role in ensuring the stability of the global economy as the foundation of our future prosperity."

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