Carney: No issue with powers given to banks

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Carney: No issue with powers given to banks

There is no cause for concern around the Bank of England’s ability to exercise the independence given to it on a statutory basis, Mark Carney has said.

He was responding to a question from Treasury select committee chairman Andrew Tyrie in parliament this morning (24 November).

Mr Tyrie asked if there was any “backstreet driving or concern around the banks’ ability to be independent.”

The Bank of England governor said pressure on central banks had increased in recent years, which have appropriately have been subject to intense scrutiny post-crisis.

This he said had led to a tendency where the independence of central banks is challenged, as can be seen in the US.

However he paid tribute to the system of “constrained discretion” in the UK, where the banks do not have independence in setting its goals, which is set by parliament.

“The banks act within those remits to achieve its objectives. We have operational independence, and a strict and comprehensive set of requirements to explain what we are doing and how we are trying to do, with accountability at its core,” the governor said.

The Bank of England Bill, which is currently at the House of Lords stage of the legislative process, is a further opportunity to further clarify, reinforce and confirm the framework that has served country well, he added.

Mr Carney also said there were no plans to abolish cash, in response to a question citing a comment attributed to him, that it was the role of the Bank to be boring.

“Cash use continues to grow in this economy,” he said. “We have a responsibility to think how the economy will evolve, and a potential role for digital money alongside cash but there are no plans to abolish cash.

“The question in my mind is when to raise interest rates so in an ideal world the role of bank is so that people do not worry about inflation or deflation, or about their financial system or boom-bust cycle and get on with more important things in life,” he added.