Europe Economy

UK's Darling Says Credit Concerns Easing


Credit conditions have eased in the last few weeks, but it is still too early to say when the current troubles in financial markets will end, British Finance Minister Alistair Darling said on Thursday.

In a statement to parliament on mortgage bank Northern Rock, Darling said the authorities continue to work with the troubled lender but the final solution must lie with the bank itself.

Britain suffered its first bank run in more than a century when news broke that Northern Rock had to seek emergency funding from the Bank of England. The run only stopped when the government stepped in to guarantee all deposits at the bank.

But Britain's financial regulatory system has come under fire for allowing the crisis to happen in the first place. Under the current framework, the BoE has responsibility for financial stability, the Financial Services Authority supervises banks and the Treasury looks after the legislative framework.

Darling said the tripartite division was indeed right, but said aspects of it would be reviewed.

Darling also said he would look at whether central banks will in future be able to provide more covert help to banks in trouble.

"And we will now review whether rules about the swift takeovers of banks need to be changed," Darling said.

He said he would use next week's meeting of Group of Seven finance ministers to push for action on better regulations to prevent a repeat of a crisis such as that suffered by Northern Rock.

"I will urge faster rapid implementation of international agreements on solvency; accelerated work on international standards for regulating liquidity; more transparent information on credit ratings; and action to improve the transparency of off-balance sheet vehicles," he said.

He also wants the International Monetary Fund to have an early warning system to strengthen financial market surveillance.