Bank of England governor warns against scrapping bank ring-fencing rules

Bank of England governor Andrew Bailey has issued a warning about the potential negative consequences of repealing the rules that separate retail and investment banking, stating that abandoning the current regulations could significantly harm the UK economy.

The rules, introduced after the 2008 financial crisis, prohibit large UK banks from using customer deposits for riskier investment operations, thereby protecting depositors' funds. According to Bailey, repealing these regulations would lead to funds being redirected from the domestic economy toward speculative transactions abroad.

As a result, the cost of credit for households and small businesses would likely increase while its availability would decrease. This could slow business activity and negatively impact both companies and individuals.

The governor insists on preserving the current system, emphasizing that it ensures the stability of the banking sector and protects the interests of ordinary depositors. Meanwhile, the country's five largest banks continue to lobby for an easing of the rules, promising to channel any freed-up capital into economic development.