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White Paper won't beef up role of Bank

CHANCELLOR Alistair Darling&rsquo;s White Paper on reform of the regulatory authorities, which has been delayed until next week, will not see a change in the structure of the tripartite authorities.<br /><br />Business minister Lord Mandelson will tonight confirm that financial regulation will remain in the hands of a beefed-up Financial Services Authority (FSA) rather than transferring powers to the Bank of England.<br /><br />In a speech to the British Bankers Association, Mandelson will say: &ldquo;We need to keep prudential and conduct of business expertise in one place, in a regulator capable of seeing all parts of the picture at once. That regulator has to be the FSA.&rdquo;<br /><br />Mandelson will also reveal next week&rsquo;s propsals should include the following themes: more macro-prudential supervision to target systemic risk; new capital rules that match the economic cycle and account better for different types of risk; a reshaped landscape for derivatives; and, a &ldquo;fundamentally different approach to risk and failure&rdquo; for banks with implicit government guarantees.<br /><br />Madelson will say: &ldquo;While I think there is an argument for the Bank taking a more direct role in financial stability issues, I don&rsquo;t support a twin peaks system. I believe the lesson of the last year is that we need a stronger regulator, not a weaker one.&rdquo;<br /><br />Darling is also expected to reject a proposal for the Bank&rsquo;s Monetary Policy Committee to be mandated to target asset prices as well as inflation.<br /><br />The chancellor is understood to believe that such a fundamental change to the structure of monetary policy would be more risky for the economy than it would be beneficial.<br /><br />The past few weeks have been fraught with disagreement over the future shape of regulation, with King and the House of Lords econonic affairs committe calling for a stronger Bank, while Darling wants to maintain the current system.