The UK's new Chancellor George Osborne announced that the Bank of England will be given new regulatory powers that will allow it to impose restrictions on how much banks can lend, and even to whom they can lend.

The task of regulating the financial system currently falls to the Financial Services Authority. When the Bank of England takes over the job, the FSA will focus on individual banks.

The main role of the Bank's Governor, Mervyn King, will be to warn when he thinks the economy is at risk of collapsing or becoming overheated.