The UK’s Banking Reform Bill has begun its passage through Parliament, bringing tough new measures to protect retail customers and taxpayers from shocks in the financial system closer to fruition. Under the new rules, banks will be required to separate partially their retail operations from their investment banking arms, and regulators will be able to force losses on senior bondholders if a bank should fail.
The power to bail in bondholders is intended to avoid taxpayers footing the bill for recapitalising failed institutions. The draft Bill introduces some elements of regulation which will support bail-in, said the government, although it pointed out that that tool would mostly be delivered by the European Union,
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