Governance at the Bank of England too weak, report finds
By Marcus Leach
Governance at the Bank of England must be strengthened to reflect its new powers, MPs on the Treasury Committee have demanded in a report published today (Tuesday).
"The Bank of England will play an even more vital role in preventing future crises, yet aspects of its governance appear antiquated," the Chairman of the Committee, Andrew Tyrie MP, said.
"The radical shakeup of financial regulation proposed by the Government provides the opportunity to do something about it."
The Court of the Bank of England should be transformed into a smaller, more expert Supervisory Board with its own staff. It should decide on the allocation of resources among the Bank's different areas of work and its minutes should be published.
The Supervisory Board should have the power to conduct and publish retrospective reviews of Bank policies and conduct, the report concludes.
The Supervisory Board should also have a statutory responsibility to respond to reasonable requests for information from Parliament.
"Scrutiny of the Bank should reflect the needs of 21st century democracy," Andrew Tyrie MP said.
"That means clear lines of accountability, and more information made available to Parliament. It should also be crystal clear who is in charge at a time of financial crisis. On all these issues the Government's draft legislation would benefit from improvement."
The Chancellor should be responsible and accountable in a period of financial turbulence where public money is at risk, according to MPs. In these circumstances the Chancellor should be given a temporary and limited power to direct the Bank.
The Committee has proposed a means by which this can be achieved without requiring the use of the 'nuclear weapon' of the 1946 Act, which would undermine Bank of England independence across the board.
"The Governor should be free of Government interference in the day-to-day running of the Bank but, in a... continued on page two >