(1) Every financial institution to which this Chapter applies shall comply with such supervisory and reporting requirements or conditions relating to its business which the Bank considers prudent to impose on it from time to time for the purposes and in the interest of the proper and orderly regulation of the institution or a group of institutions (including the institution) or for the purpose of the development of the Area as an International Financial Services Centre.

(2) The imposition of prudential, supervisory and reporting requirements and conditions by the Central Bank shall not constitute a warranty as to the solvency of entities covered by this section or entities forming part of groups covered by this section and the Bank shall not be liable in respect of any loss incurred through the insolvency or default of any of those parties.

(3) The Bank may decide not to impose prudential, supervisory and reporting requirements and conditions on a financial institution or a class of financial institutions where it considers that the imposition of such requirements and conditions is not necessary in the interests of the reasonable protection of the public, the financial system or a sector thereof, or otherwise in the interests of the proper and orderly regulation of the institution or class of institutions, or the Custom House Docks Area (within the meaning of section 41 of the Finance Act, 1986).