QUOTES- Bank of England’s Bailey speaks about tests for funds after recent upheaval

© Reuters. FILE PHOTO: Governor of the Bank of England Andrew Bailey attends the Monetary Policy Report News Conference at The Bank of England, in London, Britain November 3, 2022. REUTERS/Toby Melville/Pool

LONDON (Reuters) – Governor Andrew Bailey spoke to reporters after the Bank of England said investment funds and other non-bank financial institutions would face their first ‘stress test’ after the near-meltdown in the pension fund sector earlier this year.

Below are comments from Bailey at a news conference.

BAILEY ON RISKS POSED BY NON-BANKS

“I think it’s different now because … we’ve now got a whole series of non-bank incidents, if you like, across different jurisdictions, and I think it is absolutely critical first of all to recognise that this is a sector that is highly internationally diversified.”

BAILEY ON REGULATING NON-BANKS

“The FPC (Financial Policy Committee) obviously has to make choices over where it focuses on what is a very big landscape… In terms of following through, I’m not saying it necessarily requires a change to remit. I think it does require a change to focus… We have made a recommendation this time…and it goes to the area of defined-benefit pensions schemes and the pensions regulator. It is not saying we should change the perimeter but it is saying that I think we need more focus on what I call the financial aspects of regulation in that area.”

BAILEY ON KEEPING REGULATION UP TO DATE

“It’s not a matter of universal deregulation but rather getting regulations that suit our case. Post-financial crisis regulations have served an important purpose, the system is more robust, but the mere passage of time does not mean those regulations are no longer needed. Far from it. They should be kept relevant and amended as such but we should assume this time is different.”

BAILEY ON CRYPTO-CURRENCY RISKS FOR INVESTORS

“I’ve taken a pretty strong line on crypto…that it doesn’t have intrinsic value and that if people wish to invest in it, they must be prepared to lose their money.”