The Telegraph reports that a financial crash to
rival the one caused by Lehman Brothers' collapse will be played out
next week, in a “war game” designed to help end the “too big to fail”
problem.
In the first simulation of its kind, Janet Yellen, and Mark Carney will
be joined by UK Chancellor George Osborne and US Treasury Secretary Jack
Lew, who will be tested on their reaction to a major US or UK bank
failure.
The exercise, designed by regulators on both sides of the Atlantic,
forms part of a series of measures designed to end the phenomenon of
“too big to fail”, limit the risks to financial stability and protect
taxpayers from future bailouts.
Osborne said the exercise, which will take place in Washington after the
IMF's annual meeting currently in progress, will examine the failure of
a big Wall Street bank with UK operations, and that of a major UK bank
with a division in the US.
We're going to make sure that we handle an institution that would have
previously been regarded as 'too big to fail'.We're confident that we
now have choices that did not exist in the past, so we don’t have to
choose between bailing a bank out and letting it collapse.
I think this demonstrates the distance that we've come in the last few
years, to build resilience, to learn the lessons of the financial
crisis, to make sure we are better prepared for whatever the world
throws at us in the future.
The initial findings of the simulation will be published next week, and
will form one of the cornerstones of G20 proposals to strengthen the
financial system that Carney, who is also head of the Financial
Stability Board, is expected to present in Australia next month
The Telegraph has more here
Practice makes perfect they say.
http://www.fxstreet.com/news/forex-news/article.aspx?storyid=a178fe23-9976-4a65-b02e-42611fd29105
