Giving the Bank of England the power to regulate financial stability will prove to be a poor decision.
The task needs to go to an institution that maintains a single-minded focus on curbing excess in the financial system rather than one that has a mandate from promoting growth and stable inflation.
Division at the BOE will ultimately leave it helpless to regulate and today’s BOE minutes already show signs of discord. MPC members voiced concerns that higher lending limits would be a signal to banks to lend more. It’s a minor hangup but it’s early days in an improving economy. When trouble eventually hits the division and gridlock will prove the BOE is the wrong outfit to trust with regulation.
