The annual speech will follow the publication of a White Paper on banking reform this afternoon, following recommendations made by the Independent Commission on Banking (ICB).
The main proposal in this reform is for the ring-fencing of retail and investment banking divisions. It is hoped this will protect ordinary customers from losses generated by investment bankers.
The original report by the ICB and Sir John Vickers proposed domestic retail banking services should be inside the ringfence and have their own independent board separate from the parent bank.
Deposit-taking and overdrafts to individual and small and medium-sized businesses would be allowed within the ringfence while loans, securities and derivatives would not.
A sixth to a third of a bank’s balance sheets should be placed within the ringfence.
The reform has been lobbied by many in the City but the majority of the reform is expected to remain the same with some concessions for overseas banks who Mr Osborne believes do not pose a threat to financial stability.
Small banks will also be exempt from the requirement in a bid for greater competition on the High Street.
Bank of England Governor Mervyn King will also be speaking at the event.