Government names new Financial Policy Committee members

The government has named four members of the Bank of England's new Financial Policy Committee and given more details on how it is to overhaul UK financial regulation.

The new committee, to be headed by governor Mervyn King and include members of the soon to be disbanded watchdog the Financial Services Authority, is part of plans to strengthen the Bank's role in keeping the financial system stable.

Former US Federal Reserve vice chairman Donald Kohn, ex-Goldman Sachs and Deutsche Bank banker Michael Cohrs, former BoE monetary policymaker Richard Lambert and ex-BoE executive Alastair Clark will join the FPC as external members, the Treasury has said.

"Today's announcements are a crucial milestone in implementing the government's plans for fundamental reform of financial regulation," Treasury minister Mark Hoban said.

The FPC will be a macroprudential counterpart to the BoE's Monetary Policy Committee, with a mandate to try to prevent risks such as asset or credit bubbles from destabilising the financial system.

It will exist as an interim body until legislation for the new regulatory framework has been passed by parliament, expected by the end of next year.

A complete range of proposals and draft legislation will be presented in the coming months.

The Treasury said the FPC would be required to "pursue financial stability in a balanced way", to counter concerns that a strict regime could damage London's competitiveness as a financial hub.

"It is vital that the FPC's objective for financial stability be balanced by a need to consider the wider impact its actions may have, particularly on long-term sustainable economic growth," the Treasury said in its proposals.