Chancellor Jeremy Hunt said British banks are stronger and better prepared to weather the crisis as he defended the move by Swiss politicians and regulators to bail out stricken Credit Suisse.
Mr Hunt said he was told by the Bank of England and the Prudential Regulatory Authority during talks to bail out the UK arm of a failed Silicon Valley bank that there was no risk to the UK banking system.
He told the House of Lords Economic Affairs Committee: “I have been assured that there is no systemic risk to the financial stability of the UK that they have identified.
“Of course, there is volatility in the market, we are aware of this, but we also believe that we are in a much stronger position than before 2008. [financial crisis]. We strongly believe that there is a resilience in the system that did not exist then.”
He said the Bank of England’s stress tests showed the system’s resilience.
“I think we have to recognize that we are going through a period of change as we move from a period of extremely low interest rates to a period of higher interest rates,” the Chancellor added. “And that leads to adjustments that need to be made around the world, and we have to remain vigilant.”
Mr Hunt said he “fully supports” the Swiss authorities’ decision to allow rival Swiss group UBS to take over Credit Suisse, adding that he believes they “made the right decision and we could get the best possible result.” .
The Chancellor was asked if he was concerned that holders of some Credit Suisse bonds suffered a $17bn (£13.9bn) loss after Swiss regulators canceled customary agreements that gave bondholders priority over shareholders to allow complete the Credit Suisse deal.
“I think this is a situation where there is no obvious solution that does not involve compromises, and I fully support the decisions of the Swiss authorities.”
He defended the government’s plans to lift the rules to help the City of London recover from Brexit. “I don’t think the status quo is necessarily the right thing to maintain financial stability, but that’s not the same as saying we won’t forget the lessons of the financial crisis,” he said.
“I think the city is extremely resilient. During Brexit, it was believed that he would suffer much more than before. The fact that we are willing to adapt, change and review the regulatory changes needed to stay competitive is a measure of how strong it is,” he said.
He spoke after data from the Office for National Statistics showed government borrowing was £16.7bn last month, up £9.7bn from February 2022.
Mr Hunt said: “Loans remain high as we are determined to support households and businesses with rising prices and … electricity bills.
“What will bring these costs down across the board is lower inflation. Therefore, halving remains one of our top priorities this year.”
Source: I News
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