News : The European Commission has dropped a proposal to shift control of the Libor lending rate from London to Paris, according to the Financial Times. The change would have put the rate under the direct supervision of the European Securities and Markets Authority. The decision to drop the proposal has been attributed to a concerted behind-the-scenes campaign by the UK government to remain the rate ' s primary authority.
BMI View: The UK banking sector continues to deleverage, but at a fairly modest pace. The recent turnaround in economic activity is a positive development which will underpin stability for the industry. In addition, we expect monetary policy to remain accommodative, which although not reviving the fortunes of weak domestic banks, will nonetheless provide a further crutch that will safeguard systemic stability.