Highlights - Osborne at parliament's Treasury Committee

LONDON (Reuters) - Chancellor George Osborne took questions about the June budget from parliament's Treasury Committee on Thursday.

Below are highlights from the session.

BANK STRESS TESTS

"The sooner we can reassure markets that, A: the bank systems of Europe are stable, that we get these stress tests, which are coming on July 23, out of the way, and people see it's credible, and there's a plan to stand behind any banks that don't meet them. Although, I should say we're not expecting that to be the case in the UK. And the sooner we can get the G20 agreement, the more the market expectations will come into line with regulator expectations."

CREDIT RATING AGENCIES' RESPONSE TO BUDGET

"What I'm trying to do is make sure that British businesses and families can borrow at reasonable market rates and competitive market rates, and obviously to finance the government debt. Those things are both made easier by keeping the country's triple-A rating, which of course as we know has been put under question.

"Now, the good news is two of the three credit ratings agencies responded very positively to the budget and the third one wanted to see whether this parliament actually implements these measures."

AVOIDING REGULATORY ARBITRAGE

"The regulatory uncertainty at international level about capital, liquidity and leverage requirements is not helping matters, which is why Britain is working hard in the G20 to say let's tell the world what these are ... so the banks have no excuse for hoarding capital."

"It's incredibly important to avoid regulatory arbitrage: banks moving jurisdiction to avoid capital requirements but also liquidity and leverage requirements."

SURPLUS COUNTRIES SHOULD DO MORE TO BOOST DEMAND

"Surplus countries of course can do more to contribute to global demand and we welcome the decision that China has made on its currency."

MONETARY STIMULUS MOST POWERFUL TOOL

"The biggest external factor out there has been concern about sovereign debt sustainability. I was very conscious that the UK has the second largest budget deficit in the EU.

"I think the budget has gone quite a long way to reassuring people that we are serious about dealing with this very large budget deficit. That's been reflected in the interest rates that the UK enjoys. It's always been my view that monetary stimulus is the most powerful tool available to stimulating growth."

GIVING TSY COMMITTEE VETO ON OBR APPOINTMENT "Tomorrow we'll be advertising for a permanent head of the Office for Budget Responsibility and from now the job application will go up on Treasury website. We hope to have applications by the middle -August.

"What I would propose to do, of course subject to your approval, is to give this select committee a veto on ... the person nominated by the chancellor of the day. I think this will be the first time that any select committee has ever had a veto on an appointment. Obviously it's entirely up to you whether you want to take up that offer, and if you feel it appropriate, put it in the statute that I propose to present to parliament. "

ON OBR JOBS DATA

"To my recollection he (the Prime Minister) did not have the information that was published until it was published. He was aware once the OBR said it was releasing the data that it was releasing it.

"Of course it's a matter of regret to me that anyone questions the independence of the OBR. If one takes a step back, and asks, is it likely that the government will want this kind of information to be produced for its benefit, the answer is no. For me, the whole purpose of creating the OBR is to give confidence in the statistics produced by the government and for the OBR to have complete independence about the numbers it publishes and when it publishes them. And we're going to put that on a statutory basis."