RTTNews - Thursday, UK's Financial Services Authority Chairman Adair Turner backed proposals to make banks plan for their own collapse.

In an interview with the Financial Times, Turner backed international moves to force the big, systemically important banks to draw up living wills.

Living wills will be a forcing device for the clarification and simplification of legal structures, he said.

In the past, authorities around the world have tended to be tolerant of the proliferation of complex legal structures designed to maximize regulatory and tax arbitrage. Now we may have to demand clarity of legal structure.

But, he admitted that the reforms would be highly contentious.

Authorities are often unaware of the level of risk in the banking system as banks structure themselves in different ways to benefit from taxes.

The wills proposals would force big international banks that the system relies on to set out how they are structured in the event they fail and need to be wound down, the BBC News reported.

Turner recently stirred up controversy for saying that he supports special taxes on British banks so as to reduce excessive payments. But, he later said that it is ridiculous to suggest that he would like to impose the tax in London only without it being levied in the rest of the world.

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