THE BANK of England yesterday sent almost its entire top tier of executives to Washington to test out a fictional scenario of a banking collapse with their American counterparts.
The war-game was designed to test communications and planning between the two nations, so that they would be better prepared for any real crash.
Britain and the US are closer together than most other countries in terms of deciding which authorities deal with different parts of a failed bank.
Governor Mark Carney went to Washington, as well as his deputies Andrew Bailey, Minouche Shafik, and Sir Jon Cunliffe, as well as City regulator Martin Wheatley. They left deputy governor Ben Broadbent in London minding the shop.
US regulators at the drill included Federal Reserve chair Janet Yellen and treasury secretary Jack Lew. The war-game was hosted by Federal Deposit Insurance Corporation chairman Martin Gruenberg.
One problem in the financial crisis was the complex cross-border nature of the world’s biggest banks. It meant that national regulators could be tempted to salvage as much as possible of a failed banks’ assets for investors and customers in their own country, leading to further instability.
It was hoped to make the process more orderly in future.