Accountability of the Bank of England : Twenty-first Report of Session 2010-12, Vol. 1: Report, Together with Formal Minutes, Oral and Written Evidence

In this report the Treasury Committee argues that governance at the Bank of England must be strengthened to reflect its new powers.

The Court of the Bank of England should be transformed into a smaller, more expert Supervisory Board with its own staff. It should decide on the allocation of resources among the Bank's different areas of work and its minutes should be published.

The Supervisory Board should have the power to conduct and publish retrospective reviews of Bank policies and conduct.

The Board should also have a statutory responsibility to respond to reasonable requests for information from Parliament.

The Chancellor should be responsible and accountable in a period of financial turbulence where public money is at risk, and in these circumstances the Chancellor should be given a temporary and limited power to direct the Bank.

The Committee proposes a means by which this can be achieved without requiring the use of the 'nuclear weapon' of the 1946 Act, which would undermine Bank of England independence across the board. Other recommendations include: the Governor should be appointed for a single, non-renewable term of 8 years; thorough parliamentary scrutiny of the new macro-prudential tools to be given to the FPC at the time of their introduction; the Treasury should give guidance to the FPC that it adopt published indicators for defining and gauging financial stability; the Financial Policy Committee (FPC) and the Monetary Policy Committee (MPC) should have a majority of external members.