Reform of the UK Financial Policy Committee

Duncan, A. and Nolan, C. (2020) Reform of the UK Financial Policy Committee. Scottish Journal of Political Economy, 67(1), pp. 1-30. (doi: 10.1111/sjpe.12228)

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Abstract

We argue that: The FPC should have a wider remit; a much broader membership (covering many specialisms); should be wholly independent of Government and outside the Bank of England; its aim should be to comment publicly and authoritatively on any possible areas of risk to financial stability while itself controlling few, if any, levers of policy. The rationale for these conclusions is that: Macroprudential/financial risks come from many sources; many of these sources are structural and outside of the Bank’s regulatory purview/competence; in a sense, the Bank gets to mark its own homework as regards issues such as the SMR, resolution, appropriateness of capital, effectiveness of ring‐fencing etc.; many aspects of macroprudential actions have distributional implications, and hence, politicians, not the Bank or any other body, should take and justify, or not, these decisions.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Nolan, Professor Charles and Duncan, Mr Alfred
Authors: Duncan, A., and Nolan, C.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Scottish Journal of Political Economy
Publisher:Wiley
ISSN:0036-9292
ISSN (Online):1467-9485
Published Online:31 July 2019
Copyright Holders:Copyright © 2019 Scottish Economic Society
First Published:First published in Scottish Journal of Political Economy 67:1-30
Publisher Policy:Reproduced in accordance with the publisher copyright policy

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