FSA and BoE division worries rise - papers 10 Sept

Amid worldwide panic, the UK money markets have frozen up, with banks hoarding cash to avoid losses and meet potential obligations and about £70bn of short-term debt due to expire in the next 10 days. The liquidity squeeze is the first major test of the split in banking regulation between the Bank and the FSA. Before 1998 the Bank of England had sole responsibility for banking regulation, but in that year the Government handed the Bank's power to supervise institutions and promote orderly markets to the fledgling FSA, leaving the Bank with responsibility for the money markets and detectin...