(Adds further quotes)
LONDON Aug 5 Bank of England chief economist
Andy Haldane said on Tuesday that frequent regulatory
intervention may need to become the rule to stem risks from
financial firms such as insurers and investment funds.
The British central bank has become more concerned that
financial risks may have moved from banks to less regulated
sectors, and Haldane's warning in a journal article follows
similar comments last month from deputy governor Jon Cunliffe.
While there was a possibility that central banks' approach
to regulation would return to the low-profile model common
before the financial crisis, there was a strong case that more
active regulation would be needed in future, Haldane said.
"It is likely that regulatory policy would need to be in a
constant state of alert for risks emerging in the financial
shadows, which could trip up regulators and the financial
system," Haldane wrote in Central Banking Journal.
"In other words, regulatory fine-tuning could become the
rule, not the exception."
Haldane said regulators would need to keep a close eye on
whether insurers, pension funds and investment funds were
exposed to too much market and illiquidity risk, which could
cause bigger and more frequent swings in asset prices.
"These cyclical fluctuations could in turn be transmitted
to, and mirrored, in greater cyclical instabilities in the wider
economy," Haldane said.
* For the full article, see here
(Reporting by David Milliken; Editing by Catherine Evans)