LONDON – UK Chancellor of the Exchequer Alistair Darling has laid out plans to bring in a panel of City experts to oversee the Bank of England in order to avoid another Northern Rock-type incident.
In a speech to the House of Commons, Darling insisted that the Bank of England must be instrumental in maintaining financial stability in the future. It is hoped the introduction of a panel will make the bank more alert to potential financial problems. Darling highlighted the effectiveness of the Bank of England’s interest rate setting Monetary Policy Committee, which is comprised of bank members as well as external city executives.
The plans were confirmed amid reports of tension between the chancellor and the bank's governor, Mervyn King, over the appointment of a deputy to replace the outgoing Rachel Lomax.
Darling is believed to be pushing for a deputy with a strong City background, while King favours Charlie Bean, currently the Bank's chief economist, who was a professor alongside the governor at the London School of Economics.King argues that he needs a deputy with a strong economics background to help him fight inflation, whereas the chancellor wants the bank to improve its financial stability expertise.