UK Chancellor George Osborne believes the SNP “are tying themselves in knots” over plans to retain the pound in the event of a yes to independence.
Follow this link: Treasury dismisses SNP currency plan
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Breakup of Financial Services Authorities puts Bank in charge of regulation and crisis avoidance in biggest shakeup since 1997
The Bank of England will become one of the most powerful central banks in the world on Monday after the biggest overhaul of financial regulation since 1997.
As part of sweeping changes that will undo the system set up by former chancellor Gordon Brown, the Financial Services Authority (FSA) has been replaced with three new bodies – the Financial Policy Committee (FPC), the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).
Slammed for being “asleep at the wheel” during the financial crisis, the so-called tripartite structure – comprising the FSA, the Treasury and the Bank of England – has made way for a new system to regulate the financial sector and ward off future crises.
With the FPC and the PRA sitting within the Bank, it has taken on vast powers and responsibility not just for regulating lenders, but also spotting and preventing possible financial shocks. It marks a return of regulatory powers to the Bank, which were taken away when it was given independence in 1997. George Osborne is hoping the shakeup will plug the gap in the tripartite system that left no one taking responsibility to monitor risks to the financial system as a whole, such as in the pre-2007 lending boom.
He criticised the structure for being “incoherent” and “without clear lines of accountability”.
The lack of oversight led to the excessive lending that sparked a sub-prime mortgage crisis and in turn the credit crunch and banking meltdown. Regulators worldwide have now accepted the need to have macro responsibilities to avoid a repeat of the financial crisis.
There were also specific faults within Britain’s financial regulations that the new system aims to iron out. With its self-proclaimed “light touch” regulation, the FSA failed to rein in banks. It later admitted mistakes were made before the collapse of Northern Rock, while it appeared woefully inept in preventing the banking scandals that have emerged in recent years – such as the Libor interbank rate-rigging affair and mis-selling of payment protection insurance (PPI) and interest rate swaps to small businesses.
There are hopes the new system will have more teeth.
With the FPC acting as the pillar of the new regime, it will take the broadest overview of financial regulation. The PRA will ensure banks and insurers have enough capital and liquidity, while the FCA will protect consumers by promoting effective competition and regulating financial services companies.
PRA chief Andrew Bailey has already promised a more intrusive approach to regulation of the 1,700 financial institutions under his remit.
His counterpart at the FCA, Martin Wheatley, has also pledged to clean up the sector with new powers to suspend or ban products.
The FCA, which will sit outside the Bank, will also be able to fine firms.
But there are concerns the Bank will become too powerful, given that it also has responsibility for monetary policy in the UK.
In a stark warning, the former head of Germany’s central bank said recently it risked impacting its independence.
Ex-Bundesbank boss Axel Weber, who currently chairs Swiss group UBS, said he “flatly refused” to take on a regulatory remit when he was head of the bank due to concerns over independence.
However, the new structure heralds a new era for UK financial regulation after the banking crisis.
There will also be a change at the top of the Bank, with Canadian Mark Carney taking over as governor from Sir Mervyn King in July.
The independence-minded region of Catalonia asks the Spanish central government for an extra 9bn euros (£7.7bn) in bailout money.
Read more: Catalonia asks Spain for 9bn euros
The appearance of independence in the new press regulatory body will be impressive. But look who’s appointing the grandees that make the decisions
The peril of political ructions over the aftermath of Lord Justice Leveson’s report begins to fade a little. Hacked Off wanted a “present or former civil service commissioner” and/or “a present high judicial officer” plonked on top of the appointments body who’ll choose the successor regulatory board to the Press Complaints Commission – and lo! their demands would seem to be met in full.
The government has asked Sir David Normington, current commissioner for the civil service – and public appointments as well – to move in and approve the appointments system that emerges. He’ll need privy council assent to extend his official brief. Expect this to follow in a few days. And meanwhile Lord Phillips, former president of our supreme court and thus just about the highest former judicial officer extant, has agreed to advise on the construction and running of that selfsame appointments apparatus.
Save for adding Rowan Williams and the Archangel Gabriel, independence on the British model doesn’t come much more walloping than this. By the time Oliver Letwin at the cabinet office has thrown in his royal charter notions and the actual leader of the new press pack has strode out of the mists of selection and verification, the greatness and goodness of the entire shooting match, with or without a sliver of statute, will surely be manifest and of huge reassurance to the public. If they can understand any of it, that is.
Yet never underestimate the potential thickets, once unsullied independence is the order of the day. David Cameron wouldn’t let Ofcom do the backstop verification work because he appointed its bosses and they couldn’t be beyond political question. “Who guards the guardians?”, as Leveson asked but rather unhelpfully failed to answer. So who appoints the public appointments commissioner? The Queen – it’s a crown appointment, his office explains. But on the recommendation of the prime minister, after a duly pristine process supervised by the minister for the cabinet office.
All roads lead to Letwin then, Sir Humphrey? Yes indeed, minister. I was afraid you were going to ask me that.
■ You couldn’t make it up. Robert Jay QC, chief counsel to the Leveson inquiry, travels to Singapore to tell the Law Academy there that Britain’s “unruly and irreverent” press has nothing to fear from statutory control, and to think so is “scaremongering”. Jay certainly knows how to pick his audience. Singapore currently stands at 150th in Freedom House’s world press freedom league: an obsessive wonder of manicured, ruly repression.
Catalans react with surprise but determination
The governing pro-independence CIU party lost 12 seats, while the vote for many smaller pro-independence parties increased. For some, it is a reflection of the anger felt at the CIU's austerity policies. But voters seem agreed on one thing, the push for …
Divisive Election in Spain's Catalonia Gives Win to Separatist Parties
Spain's Catalan nationalists win elections in local parliament
Voters deal blow to Catalan president's hopes for independence referendum
The widely praised press regulation model in Dublin isn’t as light-touch as it seems – and doesn’t even contain many of the reforms Lord Justice Leveson would like to see in Britain
The easy answer to Sir Brian Leveson’s problem has always been floating temptingly out there, just over the Irish Sea. Dublin’s press-council-plus-ombudsman system already has all the Fleet Street papers who sell copies in Ireland as more-or-less voluntary members, without fear or overmuch fury. It also features a novel kind of statutory underpinning because both council and ombudsman are mentioned in the 2009 Defamation Act, which theoretically means members qualify for lower libel damages because they’re fair and responsible citizens.
What could be neater? A solution embraced and working that provides real incentives to join? Even Richard Desmond has signed up. No wonder the Times is predicting that the Leveson report, when it arrives, may boast a bright green cover and shamrock trimmings. It will be billed, apparently, as “light-touch regulation”, a mild, modest blend of this and that no one need get too worked up about.
Unless, of course, you want to light the blue touchpaper and retire immediately: because all is not quite as it seems. To begin with, the Irish regime does not involve fines as sanctions – just printed corrections and adjudications. It does not, in a strict sense, investigate anything beyond individual complaints from those personally affected. It is fundamentally – like almost every other press regulation body in the western world – a complaints-handling organisation. It takes up cases only after a complainant has failed to get satisfaction from a newspaper. It does not, in general, consider wider issues or secondhand beefs. Nor is membership of the system complete. Voluntary means voluntary and a number of smaller papers and magazines haven’t joined – the Private Eye exception on a rather bigger scale.
Every one of those points (well charted in a Reuters Institute study) falls way short of the overarching Leveson diagnosis of what’s needed. Many of them, indeed, are more rigorously addressed by the UK press’s own scheme for a upgraded Press Complaints Commission bolted together by contract law. The Irish ombudsman – horror of horrors! – is a twinkly, humorous journalist turned politician, John Horgan. He’s long on charm and common sense. But he is still a journalist by instinct – not at all the “independent” voice that Leveson prescribes. Nor is the press council itself especially independent by London lights. Six of its nominated members represent the press in various ways. Seven are appointed because they don’t, but a former diplomat as chair, sitting with three academics and three lawyers, isn’t necessarily a blend that speaks to a wider public.
And as for the light-touch underpinning, remember two heavyweight things. One is that the press council is accountable to the Dáil because the justice minister can revoke the order recognising it in the Defamation Act – with parliamentary scrutiny of its performance due in 2014-15. Another is that, in a crisis, the justice minister thinks he (and not the communications minister) has an obligation to intervene. So when the Irish Daily Star published those topless pictures of the Duchess of Cambridge, the ministry of justice was into action in a flash, ordering a review and threatening to introduce a pretty draconian privacy bill that was lying ostentatiously on the minister’s desk.
There’s independence and independence, in short. There’s a not-entirely-innocent underpinning that can lead to bigger things in a trice. And there’s always a threat or two of something worse lurking not so far in the background.
The Irish solution has flourished so far because, most of the time, it deals in persuasion – because it demands few of the penalties and obeisances Leveson has on his list. But don’t think (small country/big country) it would function so sweetly over here, especially when Horgan himself adds one more caveat – that a solution should be negotiated and agreed as the Irish example was: not imposed by fiat.
The Spanish prime minister rejects a call from Catalonia’s leader for fiscal independence, days after a big pro-autonomy rally in Barcelona.
Here is the original post: Spanish premier rebuffs Catalonia
Leader of Spain’s wealthiest region suggests separatist feeling could be dampened if Catalonia kept more of its taxes
The European Union must prepare itself for the breakup of countries within its frontiers, the regional prime minister of Catalonia warned on Thursday, adding that Madrid could not simply ignore a huge independence demonstration held in Barcelona this week.
Artur Mas said: “Europe will at some time have to think about this. It wouldn’t make sense if, because of some rigid norms, it was unable to adapt to changing realities.”
His comments came after the European commission president, José Manuel Barroso, indicated this week that any new state would have to apply to join the EU.
Mas said there would be no looking back for Catalonia after the march, which police said was attended by 1.5 million people – a fifth of the population of the north-eastern region. He also warned the Spanish prime minister, Mariano Rajoy, and his conservative People’s party (PP) government that they would be foolish to try to ignore the apparent desire for greater autonomy.
“This was not a sudden summer fever,” he said. “In Barcelona there was a vast, peaceful multitude of people … The biggest possible mistake would be to minimise what is happening.
“It was very important both quantitatively and qualitatively. The feeling was that Catalonia cannot continue on the current path, that it needs its own project.”
His words came as the state television company, TVE, apologised for relegating the demonstration to fifth place in its evening news, a move that underlined the growing disconnection between Madrid and Barcelona. “This news item was poorly placed on the evening news,” a spokesman admitted. “That was an error.”
Mas, from the Catalan nationalist Convergence and Union coalition, suggested that independence was not the only solution. Many members of his regional government were at the march and his party is often accused of calculated ambiguity on the matter.
“I identify with the popular outcry,” he said, adding that only his responsibilities as regional prime minister had prevented him from joining the demonstrators. “Catalonia needs a state,” he added. “For years we thought it could be the Spanish state.”
But just as northern Europe was getting fed up with the south, and vice versa, so Catalonia and the rest of Spain were now fed up with one another, Mas said.
He implied that one way for Rajoy to dampen the surge in separatist feeling would be to agree to a change in funding, allowing Spain’s wealthiest region to hold on to more of the tax it generates.
Catalonia wants to be able to collect its own taxes and send a share to Madrid, rather than the other way around. That would make it different from most of Spain’s other 16 regional government, but similar to the northern Basque country.
Mas will see Rajoy next week to discuss what he called an issue of “fiscal sovereignty”. Popular outrage at Catalan money going elsewhere amid health and education cuts was fuelling the thirst for independence, he suggested.
Mas said that whatever changes came after this week’s demonstration, Catalans wanted to stay in the EU and the euro. “We haven’t gone mad,” he said.
Catalonia enjoys a high degree of self-government, running health, education and local policing, but allowing it to form a separate state would be both extremely difficult and potentially explosive. A legal separation would require a change in the Spanish constitution and approval by voters in other parts of the country in a referendum – which seems unlikely.
“Unilateral secession does not fit in Spain’s constitutional framework,” foreign minister José Manuel Garcia-Margallo declared on Thursday. “A declaration of independence by a region does not fit.”
Officials in Brussels have also said that Catalonia would automatically leave the EU, and might have to abandon the euro and print its own currency.
“A new state, if it wants to join the European Union, has to apply to become a member like any state,” Barroso said this week. “And all the other member states have to give their consent.”
Garcia-Margallo warned that Catalonia or any other Spanish region that achieved independence would find itself at “the back of the queue” for joining the EU.
The independence demonstration sets a further challenge for Rajoy as he copes with 25% unemployment and a double-dip recession, and decides whether to request a bailout by the European Central Bank and fellow eurozone countries.
“Catalonia has serious deficit and employment problems and this is not the moment for messing around,” Rajoy said before the demonstration.
Mas’s government has launched several austerity programmes as it struggles to bring down its deficit, and ratings agencies give its debt junk status.
Economists doubt it will hit deficit targets set by the central government this year, however, and Rajoy’s government – which is keen to persuade fellow eurozone countries it can control overspending regional governments – has threatened to intervene and take direct control of regional finances where that happens.
Mas has threatened to call elections if that is done in Catalonia, believing it would provoke a wave of nationalist sentiment. Catalans pay between ¤12bn and ¤16bn more in taxes each year to Madrid than they receive back, with the excess going to poorer regions such as Andalusia and Extremadura.
Surge in secessionist sentiment surprises regional government as Madrid dismisses ‘big gesture’
Barcelona was a sea of red and yellow Catalan flags as more than 1.5 million people brought the city to a standstill on Tuesday at a mass rally called to demand independence for the Spanish region.
The planned route was already filled with demonstrators before the march began, in what marked a watershed for the hitherto marginal independence movement.
At least one train and more than 1,000 coaches had been chartered to bring supporters to the march.
Long-standing resentment about what Catalans see as their unfairly high contribution to central government has been inflamed by Spain’s economic woes. Polls published on Tuesday show support for independence running at 46.4%, twice as high as in 2008, when the financial crisis began.
The upsurge in support for secession has caught Catalonia’s nationalist CiU government on the hop. CiU, which has governed Catalonia for 25 of the 33 years since democracy was restored, has never aspired to independence, preferring to wring more autonomy out of minority governments in Madrid.
Artur Mas, the Catalan president, initially said he had no intention of joining the march but later said he would attend in a personal capacity. Carme Forcadell, a spokeswoman for the group behind the march, said: “Anyone who attends should understand that they will be considered pro-independence.”
Speaking on television on the eve of the rally, Mariano Rajoy, the Spanish prime minister, dismissed the march, saying: “This isn’t a moment for big gestures like this. What we need to do is create jobs.”
Carles Brugueras, a documentary film-maker said he was not a nationalist but favoured independence from a strictly economic perspective. “For a long time, Catalonia has been generating a lot of resources for Spain but the fiscal balance has been very unfair,” he said.
Laura Nuñez, a law student and also a new convert to independence, said she believed it would boost the Catalan economy. “We’re economically the most powerful part of Spain, because of industry and tourism, and we contribute more than other Spanish regions,” she said. “We shouldn’t be subject to this internal discrimination.”
The slogan for the march was “Catalonia: a new European state”. But a European Union spokesman in Brussels pointed out that, were Catalonia to secede from Spain, it would have to leave the EU and could rejoin only if it met the economic criteria and if other member states voted unanimously in favour of its membership.
Whether Catalonia would be viable as an independent state is an open question. Much of Catalonia’s wealth comes from tourism, but there are major industries in the region, as well as a significant multinational presence. Whether these firms would want to remain in a small state that was not part of Spain is unclear.
If the region continues to pursue independence, boycotts could follow, analysts warn. There was a damaging cava boycott in 2005, when Catalonia refused to back Madrid’s bid for the 2012 Olympics.
The economist Xavier Cuadras warned: “A large-scale boycott could cause a 40% drop in exports of consumer goods to Spain, and a sustained boycott could cost Catalonia 4% of its GDP.” Spain accounts for 54% of the region’s exports.
In sport, Catalans make much of the fact that half the victorious Spanish football team are Catalans. But it is doubtful whether many of those players would play for a small country that was unlikely to win anything at an international level. The same goes for the mighty Barcelona football club: if Catalonia were independent, it would be reduced to playing in a semi-professional league.
And not all Catalans are pro-independence. Some 40% of Catalans are Spanish immigrants – or the children of those immigrants – who fled poverty in rural Spain after the civil war and retain strong family and emotional ties with Spain. Then there are a further 1 million people (14% of the population) who are from other EU states, Latin America, Morocco, Pakistan and China. Very few of these, were they given the chance to vote, would back independence.
There is considerable antipathy in Spain towards the Catalans, who are widely perceived as rich, spoilt, constantly complaining and forever playing the victim. Catalans are, understandably, hurt by this. “The rise in the pro-independence movement is directly related to the Spanish state’s inability to include Catalonia,” said Miquel Berga, professor of English literature at the Universitat Pompeu Fabra. “It seems to me that only a profound change in constitutional arrangements can address the prevailing sense of dissatisfaction.”
Joan Fumaz, a chef, said: “If we were independent, we wouldn’t have to go on justifying ourselves. I’m Catalan. It would be nice not to have to explain that to people all the time.”