Wednesday, 12 March 2014

UK: Bank of England governance and a new Deputy Governor

The Governor of the Bank of England, Dr Mark Carney, appeared before the Treasury Select Committee yesterday. A video recording of the meeting is available here. The meeting has been reported widely in the media: see, for example, here (BBC News), here (The Guardian) and here (Financial Times, subscription required).

Amongst other things, Dr Carney said that a review of the Bank's governance and processes would be published next week and in this regard he said that a new Deputy Governor position would be created with responsibility for banking and markets. What is not clear - and may well become clearer next week - is how this will be achieved. The Bank's formal governance structures, including membership of its Court of Directors, are set out in the Banking Act 1998, recently amended by Part I the Financial Services Act 2012. Legislation requires the Bank to have a Governor and Deputy Governors for financial stability, monetary policy and prudential regulation. Will changes be made to the Banking Act 1998 in respect of the proposed new Deputy Governor position? This is not clear but, according to the Financial Times report, the proposed new Deputy Governor is to have "the status of a deputy governor but will not formally join the ranks of the three official deputy governors". This would appear to suggest that amending the legal framework is not envisaged. Is this an appropriate? Is it possible for the new Deputy Governor to enjoy the same status as the other Deputy Governors if the position does not carry the same legal status?

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