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Clause 7

Part of Banking Bill – in a Public Bill Committee at 9:45 am on 6th November 2008.

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Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform, Economic Secretary, HM Treasury 9:45 am, 6th November 2008

I agree that the Bank of England needs to be resourced to perform the tasks required of it, particularly the responsibility for financial stability under the powers given to it in the Bill. That is right and proper.

As a final word on the matter, because we are treading on the ground of a stand part debate, I want to make it clear that we are not designing a zero-failure regime.  There might well be circumstances—who is to say?—in which the Bank or Treasury decide not to use a stabilisation power where the threshold conditions have been triggered. In those circumstances, the bank might go into a normal insolvency, but it might also go into the bank insolvency procedure detailed in the Bill to ensure fast payout through the Financial Services Compensation Scheme. It is not a zero-failure regime, but we believe that the lead responsibilities among the different parts of the tripartite arrangement that makes up the authorities are the right lead responsibilities. Of course they will work together closely. That is the normal and expected way of things.