Government veto on City curbs would be ‘serious concern’, says Bank of England deputy
Giving the government veto rights over measures taken by City regulators would be a “serious concern” and damage the competitiveness of UK financial regulation, the official in charge of financial stability at the Bank of England has told MPs.
Sir Jon Cunliffe, a BoE deputy governor, told a parliamentary committee on Wednesday that a mooted “call-in” power allowing ministers to review regulatory decisions risked undermining perceptions of the central bank’s 25-year-long independence.
“A power which would call in, or rewrite or veto, rules would frankly, give me serious concern,” Cunliffe said. “It goes to competitiveness . . . The credibility of the institutional framework is very important to the competitiveness of the UK.”
Cunliffe said the BoE had not been fully briefed on the “mini” Budget ahead of its release.
“Had we thought that there was a clear risk to financial stability ex ante (we did ex post) — and the market reaction is always difficult to forecast — but if we thought this was something to affect financial stability, we would’ve advised the government. But not on the composition of fiscal policy; it would’ve been on its knock-on effect,” said Cunliffe.
He added that as the new chancellor Jeremy Hunt had indicated that his fiscal statement, due October 31 would be akin to a Budget with Office for Budget Responsibility costings, he would expect the BoE to be briefed in advance.
This story originally appeared on: Financial Times - Author:Caroline Binham
