Tories want to give Bank of England greater powers over Britain’s financial system

[efoods]The Conservatives have pledged to hand the Bank and its Governor Mervyn King power to control the balance sheets of all Britain’s major banks and finance houses, as well as regulation of the broader financial system. With its existing power to control interest rates, the proposed reforms will mean the Bank will rival the US Federal Reserve as one of the western world’s most powerful central banks, with a reach that extends from controlling the speed of the economy to the behaviour of its banks.

Few other central banks have almost untrammelled independence to set both interest rates and to oversee banks. Indeed, under the Conservative plans, the Bank would be significantly more powerful than before Labour came to power in 1997.

Richard Lambert, CBI Director-General, said: “This is a very radical blueprint. The Conservative proposals would give the Bank of England the most wide-ranging powers of any central bank in the major economies.

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