Don't give it to the Bank

Author: | Published: 1 Jul 2009

The banking crisis has inevitably led to a debate on how the UK regulatory system failed and the reforms necessary to put it right. Two recent reports, one by Sir James Sassoon commissioned for the Conservative Party and one by Sir Martin Jacob for the Centre for Policy Studies, suggest that the structure of the UK regulatory system is at fault and that the Bank of England should have a greater regulatory role.

Both Sir James's and Sir Martin's reports start from the basis that the banking crisis was caused, or at least exacerbated, by the fact that responsibility for financial stability is split between the Bank of England, with responsibility for macro-economic policy, and the FSA, with responsibility for supervising individual firms. The failure of the two bodies to communicate effectively under the Tripartite Agreement, devised in 1997 when the FSA was set up, meant that neither body took...