1.70 The Government is implementing its plans to overhaul the tripartite system of financial regulation, by meeting its commitment to provide the Bank of England with:
• control of macro-prudential regulation, which relates to system wide risks. The Government will legislate to create a Financial Policy Committee (FPC) within the Bank of England, with a clear macro-prudential remit to identify the risks that build up across the system as a whole and the power to ensure that action is taken to address those risks before they can threaten wider stability. An interim FPC, established in February 2011, has met three times; and,
• oversight of micro-prudential regulation, which focuses on risks within individual financial institutions. The Government will establish the Prudential Regulation Authority (PRA) as a subsidiary of the Bank. The PRA will promote the safety and soundness of the financial institutions it regulates, minimising the wider economic impact should a firm fail.
1.71 The Government has published and consulted on draft primary legislation to implement these reforms. The draft Bill is currently undergoing pre-legislative scrutiny by a Joint Committee of Parliament. Subject to Parliamentary timetabling, the legislation will be introduced early in 2012.