Following the SVB failure, Britain is reviewing plans for "Edinburgh" light regulation.

Britain's intentions to re-introduce light touch regulation was being reassessed this week in light of the SVB collapse.

To make the UK more appealing after Brexit, Prime Minister Rishi Sunak and Chancellor Jeremy Hunt are pushing for financial services regulation. These, also referred to as the Edinburgh Reforms, are currently being reevaluated.

The law, according to Vicky Saporta, executive director for prudential regulation at the BoE, is "a big deal" and will "make a big difference" in how it regulates banks, she said last month.

The government was now being encouraged to use far greater caution. In the years leading up to and following the 2008 banking crash, Lord Nick Macpherson served as the Treasury's permanent secretary. He remarked, "The Treasury must be careful not to follow the US example and weaken regulation in the name of competition."

The Bank of England's plans to create a "strong and simple" regulatory framework for smaller banks, which is intended to reduce red tape and increase competition by exempting them from some of the requirements of the Basel global industry standards, are expected to draw criticism, according to observers.

The Bank of England may now need to give the dangers associated with a particular industry having such a large concentration in a single bank "more prominence," according to reports from inside the Treasury. SVB had extensive exposure to the global technology sector.

But, Andrew Griffith, City minister, has argued that the rescue effort for SVB UK, under which HSBC on Monday agreed to acquire the insolvent bank for £1, proved that "the system has worked as intended".

Chancellor Jeremy Hunt is requesting a financial services and markets law in accordance with the Edinburgh Review, which would give regulators a "secondary objective" of fostering economic growth and City competitiveness in addition to the primary objective of financial stability.

Today following the SVB debacle, Labour has called for a systemic examination of the risks that increasing interest rates pose to the UK financial sector.

The opposition City minister Tulip Siddiq also inquired about the Treasury and BoE's opinions on "the significant liquidity risks arising from [SVB UK's] deposit base being a small number of high-value corporate deposits" in their responses.

On March 28, Andrew Bailey, governor of the BoE, will testify before the House of Commons Treasury Select Committee about the demise of the SVB UK and its sale to HSBC.

By fLEXI tEAM