In its Green Paper, the Treasury is seeking the views of the
financial industry on "whether new statutory powers should be
sought to assist in promoting order in the financial system in
extreme circumstances".
Such circumstances would include "problems arising from physical
causes, such as a terrorist attack or severe adverse weather, or
from IT difficulties, such as a computer bug or virus".
The Treasury has put forward two new powers: suspension and
direction. It claims that such powers would only be used in extreme
circumstances and not in "a purely financial crisis".
Suspension powers would, according to the document, allow the
Government to "suspend certain financial system obligations" and
freeze markets for a certain period of time.
The direction powers would enable the Government to take direct
control of certain financial infrastructures "including exchanges,
clearing houses and payment systems".
According to the consultation document, companies could not be
sued for non-payment while markets were suspended.
The Treasury is looking for opinions "on whether such
legislation would be justified by the nature and scale of the
threat". The consultation also invites comments on "additional ways
in which the financial authorities could usefully assist the
private sector's work in making financial markets more
resilient".
Financial Secretary, Ruth Kelly, said:
"The 11 September attacks on the United
States caused terrible loss of life and physical damage. They also
showed the problems that physical disruption on such a scale brings
for the financial system – as exemplified by the four-day closure
of the New York Stock Exchange.
"Financial services play a vital role in the
UK economy. This makes it particularly important to be sure that we
have good arrangements in place to maintain the financial system's
resilience during major operational disruption".
The deadline for submitting contributions is 25 April 2003.
The Green Paper and submission details are available
here
