The new chairman of the Financial Services Authority (FSA) has said it could punish banks who pay bonuses that encourage excessive risk-taking.
Lord Adair Turner told BBC News that the regulator had the power to require banks to hold more capital, making it more expensive for them to do business.
There has been criticism that the bonus culture in the City contributed to the current financial crisis.
However Lord Turner said this aspect should not be overstated.
He said 'No decision' on giant database ...
NHS overhaul plans to be laid out ... other factors would be more important in ensuring there was no repeat of the credit crunch and the subsequent financial turmoil.
Lord Turner said regulators should, for example, monitor much more closely the level of liquidity in the system.
"We have to go back to basics in regulatory terms to make sure this doesn't happen again in five or 10 years' time," said Lord Turner, who took over at the helm of the FSA on Saturday.
(BBC)
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