King to get tough on banks' balance sheets

The governor for the Bank of England, has warned that central banks and financial institutions were 'extremely likely' to toughen regulation in light of the current credit crisis it was reported in the Daily Telegraph.

'It is too early to foresee clearly where the long-term direction will go. But serious thinking and a willingness to contemplate radical change will be necessary,' King said.

The tone, in his speech to the Bank of Israel, may stoke fears of a crippling new set of regulations. King said that 'radical change' was being contemplated for Wall Street and the City to combat future crisis.

King said: 'Much hard thought will need to be given to the structure and nature of banking regulation in the future.'

His comments reflect on the Financial Services Authority, the primary regulator, which recently announced its shortcoming regarding the Northern Rock debacle.

Further reading:

Mervyn King warns of 'radical change'

Treasury MPs take on FSA over Northern Rock

Bank facing Treasury grilling over Northern Rock