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http://www.ft.com/cms/s/0/...1e0-9c12-00144feab49a.html#ixzz1ACZpP5sTMr Osborne shares the concerns of Gordon Brown, former prime minister, that European countries have failed to follow the UK’s lead by ensuring their banks were properly capitalised following the crash.
He argues that the International Monetary Fund or other external bodies should be brought in to bring credibility to a new round of stress tests for European banks, after the last such exercise was shown to be badly flawed.
He says Europe cannot repeat the mistake and that new stress tests – scheduled for next month – should be “much tougher”, covering liquidity as well as capital.
The last round of stress tests, in July, in which 84 of the 91 banks scrutinised – including Bank of Ireland and Allied Irish Bank – received a passing grade have been widely discredited, amid lingering concerns about banks’ exposure to other struggling European economies.
“It is revealing that the tests conducted last July identified a capital shortfall of just €3.5bn yet less than six months later Irish banks alone required 10 times that amount,” Mr Osborne writes.
“That is why the UK has already gone much further with tougher stress tests and now has banks that are among the best capitalised in the world.”
Mr Osborne’s comments may be seen in some European capitals as a return to the days when Mr Brown, as chancellor, would issue lectures on how eurozone countries should run their economic affairs.
But the chancellor’s aides insist Mr Osborne recognises that Britain is only starting its tough fiscal squeeze and that obstacles to growth are as prevalent in the UK as in some other parts of Europe.
http://us.rd.yahoo.com/finance/news/rss/story/...44feab49a,s01=1.html
