BoE Won’t Reduce Regulations; BoJ to Halt Expanding Stimulus

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The Bank of England’s Prudential Regulation Authority (PRA) announced that British banks will not have regulations reduced. Banks will also not face new rules implemented, according to the country’s top banking regulator, Sam Woods.

Woods, in his position since June, made the announcement on Wednesday.

Speculation among banks that the U.K. will loosen regulation, much of which was imposed by the European Union, has risen in recent months. Banks expected some of the regulations to be eliminated or reduced following Brexit.

Woods confirmed that banks will remain under the same regulations during his tenure.

He stated that banks will remain under supervision after Brexit. The banking industry is most concerned over the “ring fencing” regulations. The regulations require banks to add capital cushions around their retail branches to reduce the risks of their investment banking activities. The regulations will go into effect in 2019, and banks have called for the regulation to be delayed.

Woods argued that “ring fencing” will remain on the agenda.

“So it is full steam ahead,” he stated to regulators in London on Wednesday.

Traders will remain cautious following Britain’s exit from the EU. Opteck’s contract for differences have led to an alternative way to trade and safeguard against losses faced in volatile markets.

Banks will need to find ways to meet new capital requirements and low interest rates. The final models will not be complete until after Britain exists.

PRA will require banks to hold capital to avoid future bailouts, as seen in the 2007 and 2009 financial crisis. The country’s major banks receive taxpayer bailouts to ensure that the banks didn’t collapse as a result.

The Bank of England states that banks hold enough capital, so they shouldn’t face undue hardships as a result.

The Bank of Japan also released data that they will hold off on a potential expansion of their stimulus next week. The country is expected to be downgraded in its price forecast. The bank’s concerns arose from Governor Haruhiko Kuroda’s announcement that it’s unlikely inflation will reach the 2% mark before the end of his tenure in 2018.

Policy will remain on hold as a result.

The BoJ is expected to discuss operational details and new policy framework initiated last month.

The bank may reduce bond purchasing if targets aren’t met.

Reports that the BoJ may reduce inflation targets next year have emerged. Weak consumption and the price of falling imports are to blame. The BoJ expects to reach the 2% inflation rate by March 2018. This figure may be revised.