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Carney praises financial services sector

08/11/13

Bank of England governor Mark Carney has praised the UK's financial services sector and stressed the importance of the City to the overall economy, adopting a significantly softer tone than he has used in previous, more critical speeches.

Speaking at a Financial Times event, the former Goldman Sachs banker announced an easing of rules for banks in need of short-term cash, marking a change in the relationship between the Bank of England and other institutions.

Support for non-banks such as currency dealers is also on the way, the incumbent governor added.

After Mr Carney took over the role in August, the financial services sector buzzed with gossip over how he would recalibrate the industry, five years after billions of pounds of public money was invested in banks to keep them from collapsing.

While he denied that he is acting as a "cheerleader" for financial services, his attitude appears to be more positive than that of previous Bank of England governor Mervyn King.

"The point is to recognise a couple of facts. London is a global financial centre ... and the UK serves a role in maintaining an open global system," he added.

"Some (critics) ... would prefer that the UK financial services industry be slimmed down if not shut down. In the aftermath of the crisis, such sentiments have gone largely unchallenged. But, if organised properly, a vibrant financial sector brings substantial benefits."

His comments are timely, particularly as the British economy begins to find its feet and undergo something of a recovery.

The banking and financial services sector can play a major role in this, with the UK's strong international reputation and willingness to innovate meaning it remains a crucial area for businesses across the globe.

Mr Carney warned that the regulatory landscape will remain strict, however, and urged banks to adopt strong corporate governance measures if they are to succeed over the coming years.

Financial services firms must still be prudent with their balance sheets, he concluded.

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