Too big to fail banks are a global affair, says Bank of England's Sir Jon Cunliffe

Hayley Kirton
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Brexit is also unlikely to change the way the UK works with the EU to secure a stable future for banking (Source: Getty)

Handling too big to fail banks is a worldwide issue, particularly given the number of lenders which trade cross-border, a key Bank of England figure has said today.

Writing for the European Economy online journal, Sir Jon Cunliffe, deputy governor for financial stability at the Bank, said international cooperation to create response plans for the failure of one of the world's largest lenders was the "biggest challenge" faced by authorities, although "impressive progress has been made since the crisis".

He added the UK's impending departure from the EU was "unlikely" to change the way the country worked with the bloc on such matters.

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"Regardless of its future relationship with the EU, the UK will seek to continue to cooperate with partners in the EU and in other jurisdictions to ensure that global standards on resolution are respected and to promote robust arrangements that govern how to deal with the failure of large and complex banks," he wrote.

Cunliffe also noted that many countries had responded to the public anger triggered by taxpayers being left with the burden to bail out the banks during the financial crisis and had introduced a range of solutions to better handle failing lenders.

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Drafting banking rules that pleases every jurisdiction is no easy task, and has recently caused headaches for the Basel Committee. For example, a Santiago meeting of the global standard-setter last week ended with no agreement being reached on capital rules.

The Committee is facing push back from the EU in particular, which would like to see the capital proposals watered down. Meanwhile, in the US, new President-elect Donald Trump has already said he intends to tear up the Dodd-Frank rules, which could throw a spanner in the works for those looking to harmonise regulation.

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