Jacob Rees-Mogg has said the UK must consider easing requirements on how much capital that banks need to hold in reserve in order to survive economic shocks.
The Brexit opportunities minister told MPs today that the government “ought to look” at easing the capital requirements for the banking sector, which were brought in after the 2008 financial crisis, while also confirming legislation will be introduced later this year to shed EU regulations on the City.
Rees-Mogg said “we need to free up financial services so they can be as competitive as historically they were”.
City minister John Glen announced earlier this year that Solvency II – which makes insurance firms hold a certain amount of capital to ensure they can remain solvent during economic storms – would be eased to increase investment in the British economy.
It is a part of a package of measures being put together by the Treasury to shed EU retained law on financial services in a bid to boost the City’s global competitiveness post-Brexit.
Rees-Mogg believes the Treasury should consider following Solvency II by easing similar regulations for the banking sector.
The amount of capital that UK banks have to hold is equal to more than 10 per cent of their risk-weighted assets, which is more than the 8 per cent required by the EU.
Rees-Mogg said changes to insurance regulation will “get new businesses growing [and] help consumers because it reduces the cost of insurance”.
He said: “It’s looking at capital ratios and you ought to look at this for banks as well. Are we doing the right things for banks?”