The UK's bank supervisory body the Financial Services Authority (FSA) last month took the lead in recommending wide-ranging reform of bank regulation.
During the government commissioned review, FSA chairman Lord Adair Turner said there had been an "inadequate focus on the analysis of systemic risk" among financial regulators internationally and called on banks to hold more capital. "There is a strong prima facie case that minimum bank capital requirements should in future be significantly above those which have applied in the past," he said. There was a "very strong case" for obliging banks to set aside capital in good years that could be drawn down during a recession, according to the review. UK arms of foreign banks could be subject to more stringent regulation, according to Lord Turner, and hedge funds and other non-traditional investment intermediaries will come under closer scrutiny.