BoE's Haldane says need to debate tougher capital rules
LONDON (Reuters) - Bank of England chief economist Andy Haldane said on Monday a debate was needed on whether banks should have to set aside more capital as a buffer against potential losses.
Haldane was taking part in a question and answer session on Twitter to promote a BoE event in November aimed at reviewing financial market regulation.
"Should (capital requirements) be higher still? Right question for tomorrow. We need that debate," Haldane said in response to a question posed by a Twitter user.
Britain has increased bank capital requirements in recent years, to guard against the government having to bail out banks again during future financial crises.
The BoE now conducts annual 'stress tests' of the country's banks, to see if they have enough capital to cope with shocks such as a housing crash or emerging market crisis. In July, it may require banks to hold more capital if their risk management appeared poor.
Haldane added that reduced financial market liquidity was caused by market changes, not just tougher regulation, and that the BoE was open to discussion as to whether this had gone too far.
Haldane, who voted earlier this month to keep interest rates at a record-low 0.5 percent, largely steered clear of monetary policy during the discussion.
Asked by a fund manager about what low long-term British government bond yields meant for BoE policy, Haldane said this depended on whether they were driven by lower inflation expectations or changes in real interest rates.
He declined to address questions about market expectations for BoE rate moves, or whether China's slowdown was a threat to the British economy.
Haldane's predecessor as chief economist, Spencer Dale, made the BoE's first major foray into social media almost two years ago, and discussed the outlook for monetary policy and forecasts for unemployment.
(Reporting by David Milliken, editing by Andy Bruce, Larry King)
