Lord Stevens of Ludgate – 2014 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Lord Stevens of Ludgate on 2014-03-31.

To ask Her Majesty’s Government, further to the reply by Lord Deighton on 27 March to remarks by Lord Myners, Lord Higgins and Lord Flight (HL Deb, col 676) and the Written Answer by Lord Sassoon on 3 July 2013 (WA 143), whether they continue to consider that borrowing from the central bank is illegal under Article 123 of the Treaty on the Functioning of the European Union; and, if so, what options are available in respect of government debt and quantitative easing while the United Kingdom remains a member of the European Union.

Lord Newby

The independent Monetary Policy Committee (MPC) of the Bank of England has operational responsibility for monetary policy. The MPC makes decisions on its policy tools, including quantitative easing (QE), in order to meet the 2% inflation target in the medium term.

The separation of fiscal and monetary policy is a key feature of the UK’s economic policy framework. To use monetary policy tools to meet fiscal objectives, such as financing government borrowing, could conflict with the MPC’s objective of price stability and undermine confidence in the UK’s monetary policy framework. Additionally, government borrowing from the central bank is illegal under Article 123 of the Treaty on the Functioning of the European Union.