The top jobs at the Bank of England are to be advertised in future as well as vacancies for outsiders on the Bank’s interest-setting monetary policy committee.
Chancellor Alistair Darling announced the new system “to inject more openness and transparency to the process” as part of a radical shake-up at the Bank, along with new powers for the Financial Services Authority, in his annual speech at the Mansion House in the City of London last night.
It will be some time before the new job ads appear. The Bank’s governor, Mervyn King has just been re-appointed for a second five-year term.
Mr Darling said that he will name the new deputy governor to succeed Dame Rachel Lomax this morning. At present there are no vacancies on the nine-member MPC.
The Chancellor also confirmed a plan to give the Bank a new “Financial Stability Committee” to run parallel to the MPC, charged with preserving the stability of Britain’s financial system. He promised details and a consultation document today.
The new committee, he said, “will bring valuable, external expertise with City experience to bear on the Bank’s decision-making”.
A slimmed down Bank of England board, or “Court”, will oversee the functions of both committees.
The FSA, Mr Darling added, will remain the sole banking supervisor, rejecting suggestions that it should share this role with the Bank in the light of its failure over Northern Rock.
Instead the Government will bring forward new legislation to giver the FSA new powers.
“No system of regulation, of course, can or should prevent the failure of each and every institution, “the Chancellor said., “But we must do everything possible to prevent problems which could pose a wider threat to stability.
“At the centre of our banking reform proposals are new powers for both the FSA and the Bank and improved procedures for co-ordination between the.
“These will reduce the likelihood of failure, lessen the impact if it happens and ensure that savers are properly protected.”
Mr Darling devoted much of his speech to highlighting the strengths of the British economy and its ability to withstand the global pressures of commodity inflation and the credit crunch.
He also insisted that Britain is not heading for a recession “Tomes are tough,” he said. “It will take time for these global difficulties to work through.
“But our economy will continue to grow.
“Independent forecasters expect UK inflation to fall back next year. Employment is at a record high. Many order books are full. British business is winning and competing all over the world.
“Our economy is flexible and resilient. In fact, both the OECD and the IMF expect us to be among the very best performers in all major developed countries. I agree.”
For the second time in a day, he went out of his way to call for pay restraint, though without mentioning the doubled-digit deal won by the striking Shell tanker drivers.
“To return now to inflationary pay settlements would undermine rather than raise people’s living standards with a damaging circle of wage increases eroded by steadily rising prices.
“We must never return to those days. That is why the Government has agreed a number of multi-year pay deals that now cover 1.5 million public sector employees.”
