City task force heads off UK government terror proposals

City task force heads off UK government terror proposals

The Bank of England has headed off proposals that would have handed the UK Government power to take control of the financial markets in the event of a major terrorist attack.

Sir Andrew Large, BoE deputy governor and chairman of a City 'Task Force on Major Operational Disruption in the Financial System', announced today that the group had concluded that no new statutory powers are needed to deal with the aftermath of major operational disruption in financial markets.

The Task Force found that existing contractual mechanisms and legal provisions available to market participants and infrastructures were generally sufficient to allow the financial sector to manage risks appropriately. It concluded that such mechanisms, together with co-ordinated contingency planning across the public and private sectors were best suited to the particularly international and interconnected nature of the UK's financial markets.

The Government has accepted the findings and dropped proposals for new legislation, which had initially been put forward in a treasury green paper published last spring.

Sir Andrew Large comments: "Our conclusion that no such powers are needed is not a signal that there is room for complacency. There are still areas where more needs to be done."

The Task Force has put forward eight recommendations emphasising the importance of ensuring best pracitice in business continuity planning, tightening of financial contractual obligations and further international co-operation. It proposes that the Tripartite Standing Committee on Financial Stability comprised of the three financial authorities — HM Treasury, FSA and Bank of England — should monitor progress in meeting the recommendations,and publish a progress report in October 2004 and annually thereafter.

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