UK FSA probes into IRS sales. The UK’s parliamentary treasury select committee has asked the Financial Services Authority (FSA) to probe the sale of interest rate swaps, which many businesses bought from banks, fearing another case of mis-selling.
With interest rates having been at historic lows for an extended period of time, thousands of small companies may be sitting on losses. Martin Wheatley, head of conduct at the FSA, says he is focusing on the big four banks – Barclays, HSBC, Lloyds and RBS – which sold 95% of the swaps.
“We think there are a number of questions to answer,” Wheatley told the treasury committee last week. The FSA will publish an update at the end of June.
BRICS to support IMF funding pool. Leaders of the BRICS emerging markets last week said that they were considering establishing a foreign exchange reserve pool and a currency swap arrangement to enhance the International Monetary Fund’s (IMF) ability to rescue troubled currencies amid turmoil in the Eurozone, which has the potential to reach into the global financial market.
The leaders of Brazil, Russia, India, China and South Africa agreed to make contributions – which would be linked to the size of the country’s currency reserves – while urging the IMF to carry out promised reforms of its quota and governance systems. The new contributions are based on the notion that the IMF would move toward governance reform at the fund, giving the BRICS economies greater power and influence within the organisation.