Reforming Financial Markets

Part of Oral Answers to Questions — Prime Minister – in the House of Commons at 12:33 pm on 8th July 2009.

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Photo of Alistair Darling Alistair Darling The Chancellor of the Exchequer 12:33 pm, 8th July 2009

The Bank of England has a statutory duty in relation to financial stability as well as monetary policy. The hon. Gentleman will know that the Banking Act 2009 gave it powers to deal with a bank that has failed. The FSA deals with the individual supervision of banks, and I announced today that it can now have different rules for different individual banks. That is quite an important change, especially with regard to the matters raised by the Liberal Democrat spokesman, Dr. Cable. We have one body looking at the overall system, and one looking at the particular. They need to work together and, as I said, whether one likes it or not, the Treasury needs to be at the table because of the fiscal consequences of any action that might have to be taken.

The hon. Gentleman asks who is responsible for doing what, but that depends on what is required. It is obviously for the Bank of England to act on monetary policy, for the Treasury to act on fiscal policy, and for the FSA to deal with an individual regulatory requirement.

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Ray Ellis
Posted on 9 Jul 2009 12:30 pm (Report this annotation)

This sounds like a very real recipe for confusion.

Communication is always difficult at the best of times, even in the smallest of organisations. How will they ensure that things do not fall into a black hole between the different bodies?

It is all very well to say "they need to work together" but that is mightily airy fairy and is not the same as saying "they WILL work togther" through this or that mechanism. And to say that who is responsible for what "depends on what is required" sends cold shivers down my spine. Here I can see a perfect example of the "somebody, anybody and nobody" scenario!

Lord help us!