A consultation on what tools the new Financial Policy Committee should arm itself with in order to help ensure future financial stability was launched today by financial secretary to the Treasury, Greg Clark.

The Financial Services Bill: the Financial Policy Committee's macro-prudential tools, sets out the proposed elements it will use to address systemic risks to the UK financial system.

These will include control over the level of the UK's counter-cyclical capital buffer; a direction-making power to impose sectoral capital requirements; and once international standards are in place, the power to set, and vary over time, a leverage ratio cap.

Greg Clark said: 'This government is committed to reforming the failed system of financial regulation. In establishing the Financial Policy Committee, the government is creating a strong, macro-prudential authority that will identify and address potential risks to stability in the financial system. But to be effective it must have the appropriate tools.'

The Financial Policy Committee was set up to be as a strong, macro-prudential authority within the Bank of England and is being championed as a core element of the government's financial regulation reforms, set to be enacted by the Financial Services Bill.

The Treasury said that in order to address systemic risks to the UK's financial system, the committee will use its powers of recommendation and issue directions to the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA.

The consultation is based on the recommendations made to the government by the interim Financial Policy Committee.

Responses are requested by 11 December 2012.

The consultation can be found at the Treasury website.