Diamond warns on new regulation
Thursday 15 December 2011 - by Andrew.Hickley@gfsnews.com
Speaking in front of the UK parliament's Treasury select committee, Diamond called for "more balance" between the effects on economic growth and on enacting further regulation following the financial crisis.
"I do worry we are leaning too far on cutting your risk and increasing your capital, and that there is too little recognition on the impact of that on the real economy."
But he claimed that the bank had not lobbied to water down any proposed reforms, recognising that "strong banks want strong regulation".
It is in the bank's best interests to ensure that effective regulations are in place, he said, given the public outcry against the sector following the financial crisis.
"We recognise that the best thing we can do is have a strong, tough regulatory environment and we want that," he continued.
"[But] you do have to make a balance. We can take capital levels so high that banks can't lend and obviously you'll get safe banks but you won't get an economy."
Diamond highlighted the country's proposed 'ring-fencing' put forward by the government-appointed Independent Commission on Banking and the UK bank levy as requirements likely to constrain business lending.
Also speaking at the committee, Standard Chartered's chief executive Peter Sands warned that policymakers risked imposing an "avalanche" of new regulatory measures that could cut growth.
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