The world's biggest banks - four of them British - have been told to
undertake sweeping reforms, or risk failing critical stress tests.
The
financial stability board (FSB) has given the 29 banks, including Royal
Bank of Scotland, Lloyds TSB, HSBC and Barclays until next October to
pass tests which would enable them to be safely dismantled if they went
bust.
They must also carry out far-reaching changes to prove they would not
have to be supported by the Government if they did near collapse.
The test stemmed from the collapse of Lehman Brothers, which many believe triggered the global recession.
Sky's economics editor Ed Conway said the 29 banks also included other household names such as Goldman Sachs and Morgan Stanley.
"If they do not pass the test, the truth is that each regulatory
authority around the world then will have the power to be able to tell
them to do something about it and to intervene if necessary.
"The point is to bring the world's financial system to a state where
some of the banks can fail without taking the entire system down with
them.
"The effort is to create a world where there is no bank that is too
big to fail, but right now, according to the authorities and the people
who know, we are a long way off that."
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