There is no magic bullet available to the FPC to simultaneously strengthen banks and increase credit creation.
The FPC will tackle systemic risk and endeavour to stop banks lending too much to inappropriate institutions.
Now the odd thing, which I didn't realise until recently, is quite how "Heath-Robinsonesque" the FPC's powers are.
The extra capital was needed "to ensure sufficient capacity to absorb losses and sustain lending", the FPC said.
Which is nice in theory, but it turns out this is not a remedy readily available to the FPC.
That said, there is a different set of dice that could be rolled, by the Bank of England's Financial Policy Committee (FPC).
Yesterday the FPC asked banks to limit dividend and bonus payments.
The Financial Policy Committee (FPC) will have overall responsibility for financial regulation and monitoring the risks of the financial sector to the economy.
Such an ordinance from the FPC would certainly lead to conflict between Sir Mervyn King, the retiring governor of the Bank of England, and Mr Osborne.
In 2009, Formosa Plastics Corporation (FPC) burned a whopping 40, 739, 225 Mcf of natural gas at its 1, 600 acre petrochemical complex in Point Comfort, Texas.
Other bank shares reflected a mixed response to the FPC's announcement.
And the FPC is also supposed to have the tools to reduce or eliminate these risks (see my note of Monday for more on this).
The FPC might yet conclude that the underlying cause of inadequate credit creation is that banks have barely enough capital to support potential losses on their current portfolios of loans.
The FPC has overall responsibility for financial regulation in the UK and is part of a new order of regulation designed to keep the banks under closer scrutiny.
The FPC said capital raising measures were also designed to ensure that banks were able to continue lending to businesses and each other, should another banking crisis hit.
Why, you may ask, can't the FPC therefore instruct the banks to leave the denominator alone and simply increase the numerator, by going to their shareholders for more equity capital?
Mr King will now chair the interest rate setting Monetary Policy Committee (MPC), the new Prudential Regulation Authority (PRA) to monitor individual banks, and the new Financial Policy Committee (FPC).
Most of the time the FPC and MPC will be leaning in the same direction: credit booms that threaten financial stability will also tend to add to the pressure on inflation.
As I said it would yesterday, the Bank of England's Financial Policy Committee (FPC) has declared that big British banks need to raise more capital as protection against possible future losses.
Under the rules for the FPC, devised by the chancellor, it can and will make a declaration that the banks as a group have to raise a specific amount of new capital.
The British Bankers' Association, the banking trade body, described the FPC's report as "the latest step in an ongoing discussion between the UK's banks and their regulators" about the levels of capital they should be holding.
In fact, there is a perfectly credible theoretical argument that at this stage of the cycle, the FPC should be encouraging the banks to actually reduce their capital ratios by inflating the denominator, the value of their lending.
Since George Osborne has set up the FPC with independent authority to minimise the risks in the financial system, he would not find it easy to over-rule or ignore it on the first occasion it makes a big decision.
But for the banks and perhaps for small businesses too, that FPC meeting could be rather more important than the budget on the following day (though, in theory, we will have to wait till March 27 to know what the FPC has ordained).
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