Tag Archives: bank of england

Vince on Scottish independence: RBS would ‘inevitably’ move to London

It’s not often we hear from the Lib Dem business secretary Vince Cable on constitutional matters. But today he appeared before Parliament’s Business, Innovation and Skills Committee to discuss the implications for business of Scottish independence, ahead of September’s referendum. Here’s what he said (via the BBC):

RBS would “inevitably” move its headquarters to London if Scotland votes for independence, UK Business Secretary Vince Cable has claimed. Mr Cable told a committee of MPs that the bank would want to be based where it was “protected against the risk of collapse”. …

William Bain, Labour MP for Glasgow North East, asked

Posted in Parliament and Scotland | Also tagged , , , and | 4 Comments

Opinion: The Bank of England’s Independence – the Law

Political RavishmentAccording to the Independent, Nick Clegg wants to take on the ‘left’ in his Party.

In doing so he accuses the Social Liberal Forum’s amendments to the economics motion as “ending the Bank of England’s independence by ordering it to do more to create jobs” and “tearing up the fiscal mandate.”

Let’s deal with the first accusation. The 1998 Bank of England Act granted the Bank independence to set interest rates. That is instrument independence. However, the remit for the Bank is set by the government and so The Bank does not have goal independence, it takes its goals each Spring from the Government.

Posted in Conference and Op-eds | Also tagged and | 17 Comments

Opinion: Keep the Bank of England Independent

Conference on Monday will debate an amendment from the Social Liberal Forum (SLF) to the Economy Motion which calls the government to “monitor closely the progress of the Bank of England, ensuring it has a refocused mandate that allows monetary policy to aid growth, reduce the unemployment rate to below 6% creating at least a million jobs, and to address weak income growth, targeting a higher level of national/median income.”

Who could possibly disagree with that? Well, me for a start. In practice this is reducing the independence of the Bank of England.

Liberal Democrats have long argued that the Bank of …

Posted in Conference and Op-eds | Also tagged | 11 Comments

What Japan did while we were sleeping

"2 x inflation in 2 years, 2 x monetary base, 2 x amount bonds purchased" “2 x inflation in 2 years, 2 x monetary base, 2 x amount bonds purchased”The overnight news yesterday from the Bank of Japan spelt out its serious intent to double the monetary base – the type of monetary easing, a l’outrance, that I have been arguing for at LDV, and elsewhere, for a number of years now.

The announcement followed the declaration back in November by the then leader of Japan’s opposition that when elected he …

Posted in News | Also tagged and | 38 Comments

Opinion: Radical action need to remedy the economy’s woes

While the Chancellor’s direction of travel in relation to tackling Britain’s economic challenges is improving, his current approach will leave Britain feeling like Sisyphus, labouring hard to push a rock up a hill but never quite feeling secure that it won’t come crashing back down, destroying the hard work already undertaken.

But just as Sisyphus continued to focus on the mechanics of getting the rock up the hill, rather than indulge in any broader experiment to escape his predicament, Osborne toils at the seams of Britain’s economic malaise.

The Chancellor happily wallows in the Bank of England’s myth that giant infusions of credit from Quantitative Easing and the ‘Funding for Lending’ schemes, are any sort of remedy to Britain’s economic woes.

Posted in Op-eds | Also tagged | 16 Comments

Sharon Bowles makes Bank of England governor shortlist

Sharon BowlesThe Telegraph reports today that Sharon Bowles, who is currently the  Liberal Democrat MEP for the South East of England has made it on to the shortlist for the next Governor of the Bank of England.

With her first hand experience of the Eurozone Crisis as Chair of the European Parliament’s Economic and Monetary Affairs Committee, she is a worthy contender for the position and, she argues, her appointment would send a powerful message of change.

“Just about everything about me is different. I’m an independent. I’m not from …

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Opinion: Will Special Branch be knocking on the Old Lady’s door?

Today three reports have been published into the operations of the Bank of England. None of these pose the killer question: why, when for month after month in 2008 the UK’s Gross Domestic Product in money terms (the NGDP) fell from its stable long term annual growth rate of +5% to -5% a year, did the Monetary Policy Committee stubbornly maintained the Bank’s interest rate at 5%?

This excellent blog by Britmouse details, details the quarterly falls in NGDP and the inertia of the Bank which has the power to set the level of aggregate demand in the economy.

It is …

Posted in Op-eds | Also tagged | 10 Comments

Opinion: Monetary policy is political, so where’s the democracy?

We are in extraordinary economic times, which have led to extraordinary measures from the Bank of England in its attempt to help steer us out of the storm. The Bank appears to be terrified at the prospect of deflation and the depressive effect it could have. Not only have base interest rates been pinned to a historical low of 0.5% for well over three years, the Bank has also used Quantitative Easing to pump £325 billion of newly created money into the economy.

We now know more about the effect that QE is having and it should send shivers down the …

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QE “benefits the better off” say Bank of England – so why are we still doing it?

In the first comprehensive report it has conducted into the impact of its Quantitative Easing (QE) policies on the UK economy, the Bank of England says that QE has “prevented a deeper recession” but that the policy “benefits the top 5% of households”.

It is the contention of this article that the central bank is broadly correct on both of those points-which begs the question, why is the Bank of England intent on pursuing the policy in the future?

I have previously written that QE has had the effect of preventing a deeper recession by effectively ending the credit crunch, but that it is limited in its capacity to deliver growth.

Posted in Op-eds | Also tagged | 16 Comments

Opinion: Britain has become a corporate state, not a free society

In the months after the financial crisis in 2008, I recall a conversation with an American friend of mine; we discussed the fallout and numerous rescue packages by countries. Financial media outlets, such as Bloomberg and CNBC, described the capital injections into financial institutions as a sign we are “all socialists now” – according to my American companion, this was far from the truth. In reality, Western economies have turned the page to fascism, not socialism.

When he mentioned this to me, I confess, it was rather amusing to listen to; very sceptical of such claims, until the request to research the facts myself led me to a worrying conclusion. The truth of matter is that we are not far off from what British fascists in the 1930s thought the financial sector should administrate to the rest of society.

Posted in Op-eds | Also tagged , , and | 51 Comments

Barclays and the Bank of England: BAD rate-rigging and GOOD rate-rigging

The Barclays rate-rigging scandal has conflated a number of issues — Bob Diamond’s bonus, ‘casino’ banking, failed regulators — making it hard to get behind the media’s shouty headlines to understand the issues which should really concern us. Here’s my brief show-your-working attempt, starting with what Barclays.

What Barclays did right: ‘fess up

LIBOR (London Inter Bank Offered Rate) is the rate at which banks in London lend money to each other for the short-term. It’s used as a proxy measure of market confidence in individual banks, as well as a benchmark for setting mortgage interest rates.

Barclays has admitted filing misleading …

Posted in Op-eds | Also tagged , , , , , , , , , and | 15 Comments

Opinion: Clutching at straws

I have spent the day clutching at a couple of straws.

Last week in the tractor factory Nick Clegg appeared to confuse the ‘deficit’ with the National Debt when he said, “We have a moral duty to the next generation to wipe the slate clean for them of debt. We have set out a plan – it lasts about six or seven years – to wipe the slate clean to rid people of the deadweight of debt that has been built up over time.”

It sounded like a fail in GCSE Economics. But suppose he wasn’t mistaking the policy to eliminate the structural deficit by 2017 for a moral crusade to wipe the slate clean by removing the deadweight of the National Debt, all £1,300 billion of it.

At the other end of my straw was the realisation that Nick Clegg might have become an extreme Market Monetarist and was revealing his plan to re-establish Nominal GDP back to its trend line, even if that meant buying in the whole of the National Debt in the mother of all quantitative easing exercises.

Posted in News and Op-eds | Also tagged , , and | 34 Comments

The Weekend Debate: Bank of England independence – an economic success story or a well-intentioned failure?

Here’s your starter for ten in our weekend slot where we throw up an idea or thought for debate…

The Liberal Democrat 1997 manifesto said the following:

We will turn the Bank of England into a UK Reserve Bank, free from political interference. We will charge the Bank with keeping inflation low and make it accountable to Parliament for achieving this goal.

Of course after Labour’s landslide victory in that election, one of Gordon Brown’s first decisions as chancellor was to borrow this Lib Dem policy and essentially transfer responsibility for monetary policy to the Bank of England.

Most Labour politicians look back on …

Posted in News | Also tagged and | 12 Comments

Opinion: Getting radical with the money supply

Last week the OECD forecast that Britain was about to experience a double-dip recession, for the first time since 1975. Vince Cable in his Centreforum paper Moving from the financial crisis to sustainable growth asks “How far should monetary policy now be expanded further in the UK to boost demand and head off a period of poor growth?

He goes on to say “There is no possibility for further meaningful interest rate cuts – real short term rates are now minus 4 percent. That means further recourse to quantitative easing.

Posted in Op-eds | Also tagged , , , , , , and | 16 Comments

Opinion: Do Banks Rule the World?

Last week many of us may have witnessed the sickening spectacle of watching a city trader declaring that Goldman Sachs rules the world… among other insights, such as how he lays awake at night fantasising about another economic depression.

If money rules the world, then surely whoever rules the world controls the money supply?

Many of us would, therefore, assume that the Bank of England creates money and regulates its supply to the economy, thereby controlling inflation and interest rates. However, whenever we look to finance a house, car, business project, etc, we invariably turn to the banks (in the …

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The email the party could have sent to members and supporters

When doing my series of posts at Christmas about the party’s challenges for 2011 one issue I picked up on was using members and supporters as a campaigning resource:

The party is not exactly short of opponents to overcome when it comes to implementing Liberal Democrat beliefs in government, yet we are not using the party’s grassroots strengths to help win those struggles.

The Conservative Party is, to take one example, split on civil liberties. Many key figures take a similar view to the Liberal Democrats, yet there are also many opponents of what a Liberal Democrat majority government would

Posted in Online politics and Op-eds | Also tagged , , and | 9 Comments

Buckingham Palace, the Bank of England and a donation to the Conservative Party

UPDATE: Paul Cuttill, the Managing Director of the D Group, has been in touch to say that he is “100% certain” that the D Group has not made a donation to the Conservative Party and that the Electoral Commission’s register of donations is wrong. (The most likely circumstances in which this could happen are if an individual involved with the D Group has made a donation personally but that the donation was wrongly recorded.)

A business networking group that lists amongst its members Buckingham Palace and the Bank of England has given a donation to the Conservative Party.

The D Group

Posted in News | Also tagged , , and | 1 Comment

Opinion: How to make QE into good Liberal Democrat policy

In the last week, there has been a silly fuss about the risk posed by a hung parliament following the next general election. Nick Clegg has scotched the idea that the Liberal Democrats would undermine stability. In fact, his party has taken far more steps than the others to demonstrate credibility to the markets. Cherished policies have been sidelined in the interest of stablity.

The UK’s leading economics writer, Martin Wolf, agrees that there is nothing to fear from minority government, adding: “I cannot be the only person who believes that Vince Cable is far better qualified …

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Daily View 2×2: 31 July 2009

Welcome to this, the final summer edition of LDV’s Daily View – the feature will return again at the beginning of September, as will the various members of the LDV editorial collective.

2 Big Stories

Treasury select committee slams Government’s “largely cosmetic” banking reform plans

Here’s what the BBC has to say:

The government’s plans for reforming the regulation of banks are “largely cosmetic” and “lack clarity”, MPs in the Treasury Select Committee say.

In its report on the banking crisis, the committee says that responsibility for strategic decisions and action remains “a muddle”. The report also says that the Financial Services Authority (FSA) “failed spectacularly” in supervising banks.

More importantly, here’s what Vince has to say:

This report rightly underlines the need for high quality and transparent regulation if we are to create a stable financial system. We must not create a regulatory system that just deals with the current crisis but one which is fit for all the challenges ahead.

“The cross party report also exposes the sheer folly of George Osborne’s proposal to hand all power back to the Bank of England. While it is true that breaking up the banks will be complex, it is also necessary. A bank which is too big to fail is simply too big.

“The secrecy in which the White Paper was created shows the extent of the deteriorating relations between the Bank of England and the Government and does not bode well for the future.”

Gary MaKinnon loses US extradition court battle

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Vince on reform of banking regulation

Lib Dem shadow chancellor Vince Cable has been delivering a speech on reform of banking regulation to the London Stock Exchange, outlining the ways in which the current regulatory model could be improved. Here’s the skinny:

  • RBS and Lloyds to be broken up before they are returned to private ownership
  • Highly paid bankers to publish details of their remuneration and confirm they are resident and domiciled in the UK
  • The FSA to remain as a unitary regulator
  • A long-term role for state banking, rather than the quick sale of state-owned banks
  • The scrapping of the “woefully misconceived” Asset Protection Scheme

And here’s Vince’s customarily pithy sound-bite:

The Government has yet to grapple with the challenge posed by the Governor of the Bank of England: that if a bank is too big to fail it is too big. One approach is to make it easier for big institutions to fail.

“Some aspects of the financial services industry are simply too big for the British economy to manage safely. The large, failed, British banks are the financial equivalent of Chernobyl. Like the former Soviet Union, the UK became over reliant on dangerous financial reactors.

“Britain has the highest share of banking assets in GDP of any major country, four times as high as the US. To prevent Britain from becoming the next Iceland, radical safety measures, like ones I have set out, are required.

“My approach to the City is not one of hostility, or of obsequiousness. I recognise its importance. But it needs ‘tough love’, not the freedom to run amok.”

But for those who want to read Vince’s words of wisdom in greater detail, excerpts from the speech transcript follow:

Posted in News | Also tagged , and | 11 Comments



Recent Comments

  • User AvatarRichard Dean 24th Apr - 6:41pm
    My first impression was of some kind of immigration plan, possibly bordering on the German one in the 1930's and early 1940's or the Powellite...
  • User AvatarCaracatus 24th Apr - 6:35pm
    Thank you Jeremy - it is very refreshing to have a MP actually come back and respond to comments on an article they have written....
  • User AvatarAmalric 24th Apr - 6:35pm
    This is an interesting idea but I hadn’t really thought of the Liberal government of 1906-1915 as one working under the banner of national efficiency...
  • User AvatarRichard Dean 24th Apr - 6:33pm
    I would have thought that "efficiency" cannot possibly be acceptable as a primary LibDem goal. Nor even a secondary one. It's just too reminiscent of...
  • User AvatarDavid Allen 24th Apr - 6:29pm
    “I haven’t read the book but…” I'll plead guilty in advance to entering the debate on that basis. What I have read is the title....
  • User AvatarWill Mann 24th Apr - 6:27pm
    @Sal Brinton I appreciate there are some high-minded principles involved - but to the outside world, and particularly the women in the outside world, the...