Lord Turner, chairman of the Financial Services Authority, recently said we needed either “more Europe or less Europe” in banking regulation. This enigmatic remark is important.
The common market for financial services in Europe allows businesses to operate freely across borders. A bank from Homeland can operate in Otherland as a branch. It either sets up an office in Otherland or, through a subsidiary, establishes a distinct but wholly owned Otherlandic bank. One of the two large failed Icelandic banks, Landsbanki , had a UK branch while the other, Kaupthing , owned a UK subsidiary.
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