Bank of England Deputy Governor Jon Cunliffe has confirmed banks will need to further adjust their balance sheets so that they will never be too big to fail. The Montery Policy and Financial Policy Committee (FPC) member said banks will soon be required to have a emergency buffer of bonds to enable a bank's critical operations to function if it burned through all its regulatory capital, according to reports from Reuters at an event held by Barclays.Cunliffe warned that new rules to protect taxpayers from bank failures are still being finalised and will prevent the banking sector from returning to the pre-credit crunch mindset."Liquidity premia were likely too low and liquidity risk very probably under-priced before the crisis," Cunliffe said.He added: "Market participants will need to recognise this change in market structure and adjust their balance sheets accordingly." One possible new proposal is the power for the BoE to vary a bank's leverage ratio or impose a cap on balance sheets, with the FPC planning to consult on this soon.OH