Chancellor of the Exchequer Alistair Darling Gives FSA and BoE More Power

Daily Forex Fundamentals | Written by ecPulse.com | Jul 08 09 13:43 GMT |

Chancellor of the Exchequer Alistair Darling today ahead of the Parliament stating that he wants stricter rules for the financial system in the United Kingdom that is dealing with the worst financial crisis since the Great Depression. The rules would include more policies to guarantee that banks are functioning correctly and that Britons are aware of what is happening with financial institutions. Darling guaranteed the financial markets would have more competition so that non-banking organizations can present services to Britons. The finance minister was against dividing financial institutions between retail and investment banking despite this might avoid bankruptcy and losses. Also the speculations in the market regarding Darling giving the Bank of England and Financial Services Authority (FSA) more authority over banks and helping them lower transactions that are risky, which resulted in the worst economic growth in the nation since the post war era. Giving the BoE more authority means that they might actually extend their quantitative easing methods as they are already buying gilts worth 125 billion pounds while so far it was reported lately that only 96 billion pounds were purchased, the government had given green light for the central bank to buy 150 billion pounds, yet they did not want to use this much in fears it might be difficult to pull back the money injected in markets. The new efforts are set towards avoiding another financial turmoil in the markets that caused the economy to undertake 1.4 trillion pounds of liabilities and hold shares in Lloyds Banking Group Plc. and Royal Bank of Scotland Group Plc. As long as banks have not stabilized, an economic recovery in the nation will be difficult because with the lack of loans being provided to Britons, there will be lack of spending and weakness in the housing sector while the nation already contracted by 2.4 percent in the first quarter, which was the worst reading since 1958! In news today, HBOS which was taken over by Lloyds, released their Halifax house prices showing that for the month of June they fell 0.5% while they were rising 2.6% in the prior month, on the year, prices dipped 15.0% from the previous decline of 16.3 percent. After house prices were easing their monthly slide lately, now we see that the scenario has reversed as banks are still not fully lending to Britons which is a main factor that is pressuring prices, yet the yearly index is rising therefore giving us slight proof that the housing sector might just be reaching its bottom. Nationwide Building Society, today released its consumer confidence showing that it climbed to an eight-month high for the month of June to 58 from 54 as Britons are somewhat optimistic regarding the outlook of the economy, yet in my opinion I believe that it will take a while for a full economic recovery to occur in the UK. The UK stock markets today slipped slightly as investors were worried about the outlook of the housing sector as house prices slipped worse than expectations arousing worries once again that the housing slump continues. As of 13:22 GMT the FTSE-100 index shed 11.65 points or 0.28% to 4,175.35 points. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk