For ten years, it has been said that Gordon Brown gave independence to the Bank of England. He never did, and this week dramatically reminds us of that fact. What he did was to give the Monetary Policy Committee of the Bank the freedom to set interest rates. What he also did, however — and this nearly caused the then Governor, Eddie George, to resign — was to take away from the Bank its regulatory function. Since 1997, matters have been run by the ‘tripartite’ arrangement in which the Financial Services Authority makes the rules, the Bank handles the money and the government sticks its oar in. Some of the trouble surrounding the collapse of the Northern Rock has been to do with this. The FSA, being a regulator, is not suited to crisis management. The Bank, also hamstrung by current rules about disclosure for quoted companies, now lacks the powers to sort everything out quickly, privately and unilaterally.
Charles Moore
The Spectator’s notes | 22 September 2007
For ten years, it has been said that Gordon Brown gave independence to the Bank of England.
issue 22 September 2007
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