Banking Act

In the light of the recent financial turmoil, the new Banking Act provides a permanent set of tools that allows the tripartite authorities to resolve a distressed bank or building society in an orderly way. These powers will help reduce the impact of bank failure on financial stability and bank customers.

The Act will increase the responsibilities, powers and role of the Bank:

• creating a new Special Resolution Regime (SRR) for dealing with distressed banks
• giving the Bank a statutory financial stability objective and with it creating a Financial Stability Committee to advise on financial system matters
• formalising the Bank's payment system oversight role
• creating a new framework for issuance of Scottish and Northern Ireland banknotes to be overseen by the Bank

These changes, beginning with the introduction of the SRR which took place on 21 Febuary, will be implemented in stages during 2009.

The Act draws on an extensive consultation launched by The Chancellor during 2008.