UK to make most radical banking sector changes in over 3 decades

LONDON

The UK on Friday announced that it was set to make the most radical banking sector reforms in more than three decades.

Chancellor of the Exchequer Jeremy Hunt unveiled the "Edinburgh Reforms," which consists of 30 regulatory changes to "unlock investment and turbocharge growth in towns and cities across the UK."

The package will review plans on a new central bank digital currency, while also altering tax rules for real estate investment trusts and regulations on the short selling of shares listed on UK markets.

Rules introduced in the aftermath of 2008 financial crisis forcing banks to legally set apart their riskier investment operations will also be changed.

This package of reforms was presented as an example of the UK's freedom to regulate its economy as it wishes after its departure from the EU.

"We are committed to securing the UK's status as one of the most open, dynamic and competitive financial services hubs in the world," Hunt said in a statement. "The Edinburgh Reforms seize on our Brexit freedoms to deliver an agile and home-grown regulatory regime that works in the interest of British people and our businesses."

He also called EU laws "burdensome" saying the new package would ramp up growth in other industries such as digital technology, life sciences, green industries, and advanced manufacturing.

The financial services sector is considered "vital" for the British economy, contributing £216 billion ($265 billion) a year to it, according to the government.

"This includes £76 billion in tax revenue, enough to fund the entire police force and state school system, while employing over 2.3 million people -- with 1.4 million outside London," the Finance Ministry said in a statement.

During the Financial Times' Global Boardroom webinar, Hunt was asked about whether the new reforms would create risks in the sector.

"Absolutely not," he said, adding: "We have to make sure that we do not unlearn the lessons of 2008, but at the same time recognise that banks today have much stronger balance sheets, and we have a much stronger resolution system if things do go wrong."

"In that context, it is perfectly sensible to make pragmatic changes just as the ones we are announcing today."