The controversial centrepiece of the new regime is a presumption that banks and investment firms in Britain must be self-sufficient in their liquidity requirements. FSA liquidity policy is based on two “high-level principles,” the regulator says. Firstly, that all its regulated entities – banks, building societies, and investment firms, including foreign subsidiaries and branches in Britain – must have adequate liquidity; and, secondly, they must not depend on other parts of their group to survive liquidity stresses, unless permitted to do so by the FSA.

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