The report by the Bank of England noted that the increase may be primarily due to the large share of global banking assets the country has at present, coupled with the projection of global financial deepening.
The size of the country’s banking system is projected to far outstrip the anticipated increase from that of the G20.
The central bank in its latest quarterly bulletin noted that some have suggested that the current size of the country’s banking system represents a material risk to economic stability and therefore, further action needs to be taken to reduce its size.
With assets rising from about 100% of GDP in 1975, the banking system in the UK is said to have undergone a dramatic shift in past 40 years and is the largest among Japan, the US and the 10 biggest EU economies.
In the UK, there are 150 deposit-taking foreign branches of banks and almost 100 foreign subsidiaries from more than 50 countries.
In its bulletin, the Bank of England also highlighted the various initiatives aimed at solving the issue of banks being too big to fail.
In conjunction with other organizations including the FSB, the Bank of England is pursuing a wide-ranging agenda to improve the resilience of the banking system and mitigate some of the undesirable reasons why the UK banking system might be so big.
Image: Bank of England, Threadneedle Street, London. Photo: courtesy of Adrian Pingstone
