Global Market: BoE governor calls for balanced banking rules, rejects deregulation push

Bank of England Governor Andrew Bailey cautioned against sweeping calls for deregulation, arguing that well-designed financial rules are essential for supporting sustainable economic growth, according to Reuters.

Speaking at the annual Mansion House dinner in London's financial district on Tuesday, Bailey said reducing regulation for its own sake would be an overly simplistic approach. He acknowledged that Britain was operating in a relatively soft economic environment but stressed that effective regulation remains a key pillar of financial stability and long-term growth.

Bailey's remarks came after he told a parliamentary committee earlier in the day that the renewed conflict between the United States and Iran had so far had only a limited impact on inflation.


The governor's speech preceded what could be the final major Mansion House address by Finance Minister Rachel Reeves. Political changes expected next week could see former Manchester mayor Andy Burnham replace Prime Minister Keir Starmer, potentially leading to a reshuffle that affects Reeves' position.

Bailey also acknowledged that not every regulation implemented by the Bank of England was ideal and said the central bank continued to refine its rulebook. Last week, the Bank announced plans to ease certain leverage-related capital requirements for banks, following a similar relaxation introduced in December.

According to Reuters, Bailey said adjustments to capital rules should strike a balance between safeguarding customer deposits and ensuring banks remain profitable enough to support lending across the economy. He noted that weak bank profitability had constrained lending during much of the 2010s, making it important to calibrate capital requirements carefully rather than advocating simply for higher or lower levels.

Bailey calls for global AI cooperation
Bailey also used his speech to highlight the growing risks associated with advanced artificial intelligence models, renewing his appeal for stronger international cooperation on AI oversight.

Bailey said regulators should coordinate the testing of frontier AI models before they are deployed widely, arguing that no country can effectively manage the risks alone given the cross-border nature of AI systems.

His comments came after Harriet Rees, chief information officer at Starling Bank and a government banking adviser, said earlier on Tuesday that British banks' inability to access Anthropic's Mythos AI model demonstrated the need for the UK to strengthen its domestic AI capabilities, Reuters reported.

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