HM Treasury has issued a technical consultation paper setting out the reforms that the government intends to bring forward in the Bank of England Bill (Bill). The reforms that will be implemented by the Bill are complementary to the Bank of England’s (the Bank) ‘One Mission, One Bank’ strategic plan and builds on the blueprint for reform that the Bank published in December 2014 in its document entitled Transparency and Accountability at the Bank of England.
In summary the Bill will bring forward the following reforms:
- maximise the synergies of having monetary policy, macro-prudential policy and micro-prudential policy under the aegis of one institution by bringing the PRA within the Bank, ending its status as a subsidiary, and creating a new committee of the Bank to be known as the Prudential Regulation Committee (PRC);
- update resolution planning and crisis management arrangements between HM Treasury and the Bank. This includes a strengthened requirement for the Bank to provide HM Treasury with information on risks to public funds, so that the system can better protect taxpayers and the wider economy from bank failures;
- improve the governance of the Bank by making its Court of Directors (the Court) a smaller, more focused unitary board; and including the new Deputy Governor position for Markets and Banking in legislation;
- implement recommendations from the Warsh review including moving the Monetary Policy Committee (MPC) to a schedule of eight meetings a year;
- adjust the statutory basis of the Financial Policy Committee from a sub-committee of the Court to a committee of the Bank, in line with the MPC and the new PRC; and
- bring the Bank within the purview of the National Audit Office, improving transparency and accountability for its use of resources.
View Bank of England reforms announced, 21 July 2015