“As a result of our investigations, we can be confident that current banking reg

“As a result of our investigations, we can be confident that current banking regulation is fit for
purpose. Banks will continue to face liquidity and solvency risk as well as credit and interest
rate risk, but as we have stated we are confident that the current regulatory regime is robust
to cope with these issues. We are also aware that some banks would like us to reduce the
amount of regulation in order to increase profitability but we do not agree with this
proposition.”
Critically review the issues raised in the extract. Your answer should include a review of the
four risks highlighted and explain how these can be managed within a large commercial
bank. In addition, consider whether there is an argument that banks cannot maximise their
profits within the constraints placed upon them by the regulators.