Paul Volcker, the former U.S. Federal Reserve chairman, will appear before British lawmakers investigating standards within the UK's banking industry later this month, the Parliamentary Commission on Banking Standards said on Tuesday.
Volcker, who led the Fed under presidents Jimmy Carter and Ronald Reagan, has been at the forefront of recent regulatory attempts to reform the U.S. banking system and will compare and contrast banking practices in Britain and the United States.
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The octogenarian is considered a sage of monetary policy and a crusader for tighter regulation in the United States.
The hotly debated "Volcker rule" preventing banks from taking risky bets for their own gain rather than on behalf of their customers and mandated by the 2010 Dodd-Frank financial reform law is expected to be completed by the end of this year.
Andrew Tyrie, who is heading the UK inquiry, said the commission will want to hear Volcker's thoughts on America's recent experiences with regulatory reform - on the steps that have been taken, on areas that require further work, and on how these proposals compare with those in other countries.
"There is no one better placed than Paul Volcker to shine some light on the standards and culture prevailing in the U.S. banking industry," Tyrie said in a statement.
"There are good arguments for more co-operation between regulators, in order to secure better standards across the world and to avoid regulatory arbitrage," he added.
In an opinion piece in the Financial Times on Tuesday, Tyrie said cultural shortfalls and measures providing banks with protection from the full disciplines of the market need to be tackled.
"Gaps in the law that have allowed banking malpractice to occur require attention. The common perception is that the law has done little to deter practices that often seemed criminal, to victims and observers alike," he said
Tyrie also points to a "gap in knowledge and understanding" between banks and their customers as a clear need for higher standards in banking.
"Recent scandals have amply illustrated the consequences; a failure of banks, and the culture within banks, to meet acceptable standards," said Tyrie.
"The commission will not be able to address all of these deep-rooted problems in a few months. But we can at least signal some remedies, suggesting ways to protect taxpayers better from the consequences of bank failure and to improve the experience of dealing with banks for customers of all types," he said.
The Parliamentary Commission on Banking Standards was launched after the British government came under pressure to scrutinize banks after Barclays was fined for manipulating interest rates.
Volcker will appear before the commission at 1230 GMT on October 17. The commission is expected to make legislative proposals by December 18.
Britain is already committed to making its banks ring fence their domestic retail operations and to give savers a higher priority in the event that lenders hit trouble.
(Additional reporting by Stephen Mangan; Editing by Philip Barbara and Mark Potter and Catherine Evans)