Financial regulation will be put back in the hands of the Bank of England under the proposed Financial Reform Bill announced in the Queen's Speech at the opening of Parliament yesterday .
It will abolish the tripartite regulation system that Labour introduced in 1997. Under that system responsibility is shared between the Bank of England, the Financial Services Authority (FSA) and the Treasury.
But there was no mention of a tax on banks' profits despite earlier reports. The Conservative-Lib Dem coalition government announced plans last week in its agreement document to introduce a levy on banks as well as measures to tackle "unacceptable" bank bonuses.
It also said an independent commission would be established to look at breaking up banks into their retail and investment banking arms to reduce risk.
However, there was no further mention of either of these in the Queen's Speech, although it is likely that there will be an update on the bank levy in the Budget on 22 June.
"Legislation will reform the framework for financial services regulation to learn from the financial crisis," the Queen said.
The proposed reform is one of 22 bills announced in the Queen's Speech, setting out what the new coalition government hopes to achieve over the next 18 months.
The Conservatives have long been in favour of getting rid of the FSA and giving the Bank of England responsibility for maintaining financial stability.
However, the Liberal Democrats have previously said they would keep the FSA and make it the single regulator, with the governor of the Bank of England having overall responsibility for systemic stability.
It is currently unclear what role, if any, the FSA will play under the proposed changes.