Tighter regulation of banking since then had led risk-taking to shift to less-regulated hedge funds and money market funds based outside Britain, he said

International News via Reuters:

Some businesses that operate in the British government bond market have made only limited preparations for a future crisis, potentially increasing the need for a bailout, Bank of England policymaker Jonathan Hall warned on Thursday.

Hall, an external member of the BoE’s Financial Policy Committee and former fund manager and Goldman Sachs partner, said there was a risk of a repeat of the 2008 financial crisis where the public had to bail out banks to avoid an even bigger financial crash.

Tighter regulation of banking since then had led risk-taking to shift to less-regulated hedge funds and money market funds based outside Britain, he said.

“There are non-bank financial institutions who are increasingly important to the functioning of systemic markets like gilts but are outside of the UK regulatory perimeter and have low levels of self-insurance,” Hall said in a speech to the Confederation of British Industry.

“If the public perceives that a market intervention ends up supporting these firms in stress, then the public outcry seen in the global financial crisis could be repeated but targeted against these non-banks,” he added.

On Tuesday, BoE Governor Andrew Bailey said the recent collapses of U.S. auto parts maker First Brands had echoes of the start of the global financial crisis. The BoE has also warned that AI speculation was pushing up share prices in a way similar to the dotcom bubble at the start of the millennium.

“Pricing is quite optimistic,” Hall said.

BOE INTERVENED IN BOND MARKET IN 2022

The BoE bought 19.3 billion pounds ($25.9 billion) of British government debt in 2022 after bond prices slumped after Prime Minister Liz Truss’ budget proposals. Hall said it was justifiable at the time as it was not reasonable to have expected funds to prepare for such a big move.    

Since then, Hall said the BoE had taken measures to design market support mechanisms that only helped non-bank firms which were well regulated – such as pension funds, liability-driven investment funds and insurers. 

But that would not always be sufficient in a crisis, and the next approach was to ensure that any BoE intervention was priced and timed in a way that excessively risky firms failed before the BoE intervened, he added.

However, continued international cooperation was also needed to ensure foreign businesses active in British markets were appropriately regulated, he said.

“It would be worrying if this important work to build resilience were threatened by reduced global cooperation, as this would unfairly shift the cost of insurance from overseas firms to UK institutions and the UK public,” he said.

($1 = 0.7451 pounds)

Reporting by David Milliken; Editing by Toby Chopra

Although Charles has met the last three popes, and Popes John Paul II and Benedict XVI travelled to Britain, their previous encounters never included joint prayers

International News via Reuters:

Britain’s King Charles and Pope Leo prayed together in the Vatican’s Sistine Chapel on Thursday, in the first joint worship including an English monarch and a Catholic pontiff since King Henry VIII broke away from Rome in 1534.

Latin chants and English prayers echoed through the chapel, where Leo was elected the first U.S. pope by the world’s Catholic cardinals six months ago in front of frescoes by Michelangelo depicting Christ delivering the Last Judgment.

Charles, supreme governor of the Church of England, was seated at the pope’s left near the altar of the chapel as Leo and Anglican Archbishop Stephen Cottrell led a service that featured the Sistine Chapel Choir and two royal choirs.

Although Charles has met the last three popes, and Popes John Paul II and Benedict XVI travelled to Britain, their previous encounters never included joint prayers.

VISIT TO THE VATICAN IS ‘A HEALING’ OF TURBULENT HISTORY

The King and Queen Camilla are on a state visit to the Vatican marking the closening ties between the Catholic Church and Anglican Communion, five centuries after their turbulent separation.

“There is a strong sense that this moment in the extraordinary setting of the Sistine Chapel offers a kind of healing of history,” Anglican Rev. James Hawkey, canon theologian of Westminster Abbey, told Reuters.

“This would have been impossible just a generation ago,” he said. “It represents how far our churches have come over the last 60 years of dialogue.”

Cottrell, the Anglican Archbishop of York, stood in at the Sistine Chapel service for Sarah Mullally. She was recently announced as the first woman to serve as Archbishop of Canterbury, the spiritual head of the Anglican Communion, but will not take the role until next year.

The split between the Catholic Church and the Church of England was formalized in 1534, after Pope Clement VII refused to annul King Henry VIII’s marriage to Catherine of Aragon.

Henry’s desire for a male heir — and a new wife who might provide one — was the immediate catalyst, but other factors were also at play, involving the English crown’s seizure of church assets and the growth of Protestant ideas in England.

As England swung between Catholicism and Protestantism during the reigns of Henry’s daughters Mary I and Elizabeth I, hundreds of Catholics and Protestants were executed for their faith, often burned at the stake.

CHARLES TO RECEIVE SPECIAL TITLE, SEAT AT BASILICA

Charles and Camilla, who visited the Vatican earlier this year to see Pope Francis, also had a private meeting with Leo on Thursday morning. At home in Britain, Charles’ disgraced brother Prince Andrew is engulfed in a deepening crisis over abuse allegations and his ties with sex offender Jeffrey Epstein.

The King will travel in the afternoon to Rome’s Basilica of St. Paul Outside the Walls, one of Catholicism’s four most venerated churches, where Leo has approved giving him a new title of “Royal Confrater”, or brother, at the connected abbey.

Charles will also be gifted a special seat in the apse of the basilica. The wooden chair, reserved in the future for use only by British monarchs, is decorated with the king’s coat of arms and the ecumenical motto “Ut unum sint” (That they may be one).

Bishop Anthony Ball, the official Anglican representative to the Vatican, said the honours “show the commitment that both of our Churches have to working for a shared future.”

Buckingham Palace announced on Thursday that Charles had also approved two British honours for Leo: making him the “Papal Confrater” of St. George’s Chapel, Windsor Castle and conferring on him the Knight Grand Cross of the Order of the Bath.

ANGLICAN-CATHOLIC TIES IMPROVING SINCE 1960s

The Church of England is one of 46 autonomous churches across some 165 countries that together form the Anglican Communion.

The Catholic Church, which has 1.4 billion members, and the Anglican Communion, with 85 million members, have been improving their ties since the 1960s.

The teachings of the two traditions align on many major issues, but the Catholic Church does not ordain women and generally does not allow priests to marry.

Reporting by Joshua McElwee; Editing by Alexandra Hudson

Dhingra also said excessively high interest rates could cause longer-term inflation problems by limiting investment in new production capacity and improvements in productivity

International News via Reuters:

Higher U.S. tariffs on imports are weighing on growth in Britain and are likely to lead to downward pressures on British inflation over the medium term, Bank of England policymaker Swati Dhingra said on Thursday.

“In my view, the primary transmission channel of tariffs to the UK in 2025 come through weaker demand, as tariffs act as a drag on global growth,” Dhingra said in a speech to a research conference hosted by Ireland’s central bank.

The disruption to trade from tariffs “means lower overall growth – and some downward pressure on prices in the medium term,” she added.

Dhingra – who has voted for a faster pace of BoE rate cuts – also said excessively high interest rates could cause longer-term inflation problems by limiting investment in new production capacity and improvements in productivity.

Reporting by David Milliken; editing by Suban Abdulla