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Financial Services

Volume 172: debated on Tuesday 15 May 1990

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To ask the Secretary of State for Trade and Industry what representations he has received concerning the definition of capital in respect of the requirements for capital adequacy on the part of firms in the financial services sector; what is his definition of capital for this purpose; and if it is his intention to apply this definition to any representations he may be making to the European Commission in respect of the harmonisation of requirements for 1992.

[holding answer 14 May 1990]: The Government will continue to take account of the views of United Kingdom financial institutions during the negotiations on the proposed EC capital adequacy directive, including views on the definition of capital. We will be pressing for a definition which takes account of the structure of the United Kingdom financial services industry. In our negotiations on the CAD the United Kingdom is pressing for capital to be related to risk, and for levels of initial capital which do not act as barriers to entry.