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Bank of England Act 1998

Volume 481: debated on Monday 27 October 2008

To ask the Chancellor of the Exchequer what recent assessment he has made of the effectiveness of the operation of the Bank of England Act 1998; what recent representations he has received about this Act; and what (a) statutory instruments, (b) departmental circulars and (c) other documents he (i) has issued and (ii) plans to issue in the next 12 months consequent on the provisions of the Act. (229506)

The Bank of England Act 1998 requires that the Chancellor specify what price stability is taken to consist of and the Government’s economic policy objectives at least once in every period of 12 months beginning on the anniversary of the day the Act came into force. The Chancellor last wrote to the Governor of the Bank of England on this matter on 11 March 2008. Consequentially the Chancellor will write again to the Governor on this matter before 11 March 2009.

As part of the Banking Bill currently being considered in Parliament the Government are bringing forward measures to strengthen the Bank of England’s role in financial stability. This includes providing the Bank with a new statutory objective relating to financial stability, enhancements to the governance arrangements within the Bank, and new policy responsibilities relating to the special resolution regime for banks, and oversight of inter-bank payment systems.

As part of the process of developing the legislation, the Government, with the Bank of England and FSA issued a consultation document, containing these proposals (“Financial Stability and Depositor Protection—further consultation”)—and on which many respondents commented, and supported.

In line with the Bank of England Act 1998, the Bank of England’s annual report and accounts were laid before Parliament in June 2008. The Treasury issues press notices regarding departing and new members of Court as required.

A full list of orders and statutory instruments that have been issued in relation to the 1998 Bank of England Act are available on the Bank of England website:

http://www.bankofengland.co.uk/about/legislation/orders.pdf