BofE wants more powers

Discussion in 'Current Affairs, News and Analysis' started by in_the_cheapseats, Jun 17, 2009.

?
  1. Neither - another independant is needed.

    11.5%
  2. Bank of England?

    88.5%
  3. Our political masters at No 11?

    0 vote(s)
    0.0%

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  1. in_the_cheapseats

    in_the_cheapseats LE Moderator

    I can only say that this to me is a good thing. The more power that is removed from the politicians the better in my view.

    http://news.bbc.co.uk/1/hi/business/8106209.stm

    I'd rather have competent economists at the BofE set financial rules and regulate us than the political cronyism that is the Treasury.

    Thoughts?
     
  2. No such thing as "independant" where the government is concerned, all "independant" bodies receive their salary from Government sources. There was nothing wrong with the job the BofE was doing before Labour came to power, so see no reason for the FSA to exist at all.
     
  3. The FSA was just a cover for bankers doing whatever they liked in any case. A complete waste of public money.

    If businesses (that's what all banks are, after all) want enough rope to hang themselves, that's one thing. But I'm damned if I can see why they should be allowed to take everyone else with them. It's not like we get any benefit out of it.

    It's food for thought in one sense: in order to make the BoE team totally impartial, they have to have no interest in the short-term profitability of the banking sector. How will that be squared with a prevailing political outlook across all main parties that the market is the solution to all ills? Can we look forward to them being 'incentivised' with bonuses for the lack of a bank collapse in any financial year? :D
     
  4. Alsacien

    Alsacien LE Moderator

    BofE and other central banks like the Fed, ECB etc should have full independance to set interest rates, control liquidity etc. They are in it for the long term perspective, not just the term of office for a government.
    Regulation is something else.
    The FSA has always been a toothless tiger in UK, but it has been the same story in the US and EU. Never been a big problem until recently, but things have to change now.
    Regulation needs to be international. This is going to happen in Europe and the US independantly, maybe they eventually get together also as the need is recognised. All major banks are now international, so the approach has to be international eg IMF framework to be implemented by Fed, ECB, BofJ, BofE - plus a clear classification on national and international operations.

    King is on the council of the ECB, so expect to see this as a coordinated regulation structure under their control, he is just making sure the right body in UK gets the responsibility for implementation.
     
  5. Much as I hate to say anything nice about the Scottish Cyclops, allowing the BofE to take over monetary policy was a bloody genius move. It's the only thing he's done right.

    Before this Labour government, the BofE merely 'advised' the Chancellor.

    The FSA is totally seperate to the BofE and there is no overlap in their roles, nor has there ever been any. The FSA (and predecessor organisations) is to "regulate" ( :? ) the Financial Services industry- most of what it does is aimed at insurance and pensions.
     
  6. Odd that. If the FSA was so bloody good, why did the The Treasury Select Committee blame the FSA for failing to act over the Icelandic Banks cock up? or the Northern Rock failure? Or the Consumers' Association over bad advise on endowment mortages?

    Old One eyes split of the BofE formers tasks into 3 different bodies has been repeatedly blamed for the failures, at least as far as the Lords and a former BofE chairman are concerned, along with a few other people...

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5424014/Lords-say-tripartite-system-of-financial-regulation-is-a-failure.html

    or

    http://www.iii.co.uk/investment/detail/?display=news&code=cotn:NRK.L&action=article&articleid=6307043

    or

    http://business.timesonline.co.uk/tol/business/columnists/article2517923.ece

    or

    http://www.moneyweek.com/investments/stock-markets/how-regulation-made-markets-riskier.aspx
     
  7. I'm not defending the FSA, or indeed Cyclops, but my point was that the BofE is the right body for monetary policy and it was Broon's one and only damn good idea.

    I hate him with a passion, but I have to be honest- he's not always wrong. Just nearly always.

    You have to admire his consistency- not everyone can bollox everything up, every time.
     
  8. Alsacien

    Alsacien LE Moderator

    Well as most other central banks operate this way, it was not exactly a stroke of genius.

    An independant central bank is also a Euro entry criteria 8O
     
  9. I thought the Bank of England was responsible for regulating the banks pre-1998 when that got moved to the FSA, or am I misunderstanding what you're saying by financial services?
     
  10. To tell the truth, I don't know about bank regulation. I worked in insurance from 2003 to 2008 so I know about that aspect of the FSA.
     
  11. Alsacien

    Alsacien LE Moderator

    The scope of the FSA is defined by the government:

    The FSA's aim is to promote efficient, orderly and fair financial markets and help retail financial service consumers get a fair deal.

    The FSA was set up by government. The government is responsible for the overall scope of the FSA’s regulatory activities and for its powers.

    The FSA regulates most financial services markets, exchanges and firms. It sets the standards that they must meet and can take action against firms if they fail to meet the required standards.
     
  12. I worked the life assurance side for a big bank and the FSA has come in, totally missed the the massive elephant sized feck up in our systems and given us a clean bill of health.
    They are seen as dangerous if they catch you but a bit of a joke otherwise as they never seemed to ask difficult questions - it was all very shallow.
     
  13. Agreed. The bit I worked in wasn't actually regulated, we just had to ensure that our systems reflected the FSA Authorisation for each agent. Most of them thought it was silly and got really uppity if you asked for their authorisation details.

    There was one guy who got so far up his own arrse he wouldn't give us his details. I was a supervisor at the time so I had the pleasure of telling him that he couldn't sell our policies in that case.