The Bank of England is set to become one of the most powerful central banks in the world thanks to the biggest overhaul of financial regulation since 1997.
As part of sweeping changes that will undo the system set up by former Chancellor Gordon Brown, the Financial Services Authority (FSA) will be replaced with three new bodies - the Financial Policy Committee (FPC), the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).
Slammed for being "asleep at the wheel" during the financial crisis, the so-called Tripartite structure - comprising the FSA, the Treasury and the Bank of England - will make way for a new system to regulate the financial sector and ward off future crises.
With both the FPC and the PRA sitting within the Bank, it will take on vast new powers and responsibility not just for regulating lenders, but also spotting and preventing possible financial shocks.
It marks a return of regulatory powers to the Bank, which were taken away from it on gaining independence in 1997.
Chancellor George Osborne is hoping the shake-up will plug the gap that previously existed in the Tripartite system, with no one taking responsibility to monitor risks to the financial system as a whole, such as the lending boom.
He has previously criticised the structure for being "incoherent" and "without clear lines of accountability".
This lack of oversight led to excessive lending that sparked a sub-prime mortgage crisis and in turn the credit crunch and banking meltdown. Regulators worldwide have now accepted they need to have macro-prudential responsibilities to avoid a repeat of the financial crisis.
There are also specific faults within Britain's financial watchdog that the new system aims to iron out. ith its self-proclaimed "light tough" regulation, the FSA failed to rein in banks.
It has since admitted mistakes were made in the run up to the collapse of Northern Rock, while it appeared woefully inept in preventing the banking scandals that have emerged in recent years - such as the Libor interbank rate-rigging affair and mis-selling of payment protection insurance (PPI) and interest rate swaps to small businesses. There are hopes the new system will have more teeth.