Britain’s finance minister has flagged several reforms and defended the regulator against criticism. As the UK prepares for Brexit, the ministry faces pressure to reform financial rules and ensure London is competitive globally. The Financial Conduct Authority (FCA) is under fire for its slow progress in approving cryptos. The regulator has also grappled with internal changes, a disillusioned workforce, and pay structures.
Earlier this week, Rishi Sunak briefed the Group of Seven central bank governors on proposed reforms. Defending the regulator and promising to keep the British economy stable, Osborne stressed that “the Bank of England is ready to take any steps necessary to make the financial system more competitive”.
UK sanctions against Russia will be imposed this week. The UK has already imposed sanctions on the Russian central bank. UK sanctions will affect Russian interests and assets. The government also said sanctions against these individuals should target only the ‘elite’ of Russia. UK sanctions are likely to make Moscow squeal over a breach of international law. The government is considering further economic action against Russia, citing the threat of Russian invasion of Ukraine.
Inflation-targeting has helped UK financial stability. The country’s central bank’s credibility has risen since the introduction of the target, but the current inflation rate remains below that target. The inflation target has rewired the central bank’s analytical brain and connected it with the operational arms. As a result, the external world began to notice a change in interest rates. Although they were relatively stable, the pound’s collapse meant that inflation expectations had risen sharply.
The financial sector has been plagued by scandals in the UK and Russia. A recent Laundromat scandal failed to catch regulators and banks, and the company Seabon Limited filed Companies House returns suggesting PS10billion in turnover. Bank records reveal PS9billion went through Seabon Limited’s accounts. Another reform, named after a Russian anti-corruption lawyer beaten to death in a Moscow prison, aims to freeze assets of human rights abusers and to publish beneficial ownership details of UK companies. Meanwhile, another reform calls for the Land Registry to state the ultimate beneficial owners.
Analysts are slashing their growth forecasts for the U.K. because Brexit uncertainty is likely to shake markets, businesses, and consumers for some time. According to IHS Global Insight, the Bank of England is expected to cut interest rates by a quarter point. However, there are some worries that Brexit will stifle growth, affecting the currency and global stock markets.
The ECB is also closely monitoring the financial markets in the UK after the referendum. The European Central Bank, the chief monetary authority for 19 euro-using countries, is on hand to provide additional credit to financial institutions as needed. In fact, the ECB is even keeping contact with other central banks in the world. The UK will be left out unless it takes steps to stop Russian money from funding English football clubs.