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Economic Situation

Volume 474: debated on Tuesday 1 April 2008

To ask the Chancellor of the Exchequer what steps he is taking to contribute to (a) tackling the turbulence in the international financial markets and (b) preventing such crises in future. (195187)

[holding answer 18 March 2008]: On 30 January 2008 the Treasury, Bank of England and the FSA published the consultation paper Financial stability and depositor protection: strengthening the framework. It includes proposals related to strengthening the stability and resilience of international financial markets and preventing crises in the future. The Government have also taken actions to address problems in the markets for mortgage backed securities (MBS). On 6 March the Government introduced new regulations for covered bonds, which will increase the pool of potential investors and strengthen market confidence in the longer term. The Government announced at Budget a Working Group that will take forward market initiatives to improve liquidity in the MBS market. Financial market turbulence has been global and also demands a global response. That is why the Government support, and is heavily involved in, the EC and G7 work programmes aimed at improving the stability and resilience of the financial system for the future.