HISTORIC PRESS RELEASE : Promoting Long Term Stability – Alistair Darling [October 1997]

The press release issued by HM Treasury on 28 October 1997.

The Bank of England Bill establishes a new framework which will promote economic stability and give a long-term focus to monetary policy the Chief Secretary, Alistair Darling said today on publication of the Bill.

The main provisions of the Bill are the establishment of the Monetary Policy Committee and the transfer of banking supervision to the Financial Services Authority (FSA).

On the monetary policy provisions, Mr Darling said:

“The Bill introduces important changes to the Bank to ensure that it can act effectively and efficiently in its new role, and to promote a stronger financial system. Its publication marks another milestone in our determination to modernise Britain’s economy and create a modern Bank that can meet the new challenges of the 21st century.

“The new framework will promote economic stability and will give a long-term focus to monetary policy in support of the Government’s objectives for growth and employment.

“Low inflation means greater certainty for investors and savers, reduced costs and improved competitiveness.

“In the long run, price stability is the main contribution monetary policy can make to achieving sustained high growth and employment.”

Mr Darling also said transparency and accountability were important features of the new framework. He said:

“The new framework maximises openness and transparency and ensures that the Bank is fully accountable and that its conduct of monetary policy meets the economic needs of the nation.

“The Bank will conduct policy in an open and transparent manner and will be accountable to Parliament especially through enhanced scrutiny by the Treasury Select Committee.”

On the transfer of banking supervision, the Chief Secretary said:

“This is the first stage of a complete overhaul and modernisation of the supervision and regulation of the financial services sector. It will mean more effective and efficient regulation of financial services.

“The changing market of the 1990s and beyond makes it essential to bring regulation of banking, securities and insurance under one roof. This move will modernise our regulatory structure – creating a new regulator that will command the respect of markets here and throughout the world.”