Tuesday, September 22


Since the Bank of England ever present on our minds, especially recently, here she is (I take this photo from  the Royal Exchange).  I visited the BOE in '97 to meet Ian Plenderleith, a senior fellow of the bank and on the Board of Overseers of the Columbia Business School.  My memory of inside a soothing calm and gentle light, which contrasts sharply with outside - dark, crowded and gloomy.  It is easy to imagine harried bankers rushing down back allies with papers crammed into over-filled carry files and armpits; or deal makers eating oysters and drinking dry martinies while deciding the fate of the many. Always a fog or overcast menacing.  In short, London's "City" a serious place with its own history, culture and experience.  I was once told, quite seriously, that one never wears anything other than black shoes in the City.  To do so uncouth.

So... the Bank of England is the central bank for the whole of the UK and the model on which most modern, large central banks have been based. It was established in 1694 to act as the English Government's banker, and still acts as the banker for the Government. From foundation to '46 BOE was privately owned and operated; from 1946 to 1997 it was state-controlled and in '97 it became independent under New Labour. The Bank, you see, has a monopoly on the issue of currency (though not in Scotland or Northern Ireland). While the Bank's Moneteary Policy Committee has devolved responsibility for managing the monetary policy of the country, the Treasury has reserve powers to give orders to the committee "if they are required in the public interest and by extreme economic circumstance." This has been the case since September '08 when Lehman failed and Super Gee came to the rescue of the Western World.  There is some truth to this as we learn that the US Fed under Hank Paulson in a state of fear and panic in those scary three weeks when the world on the edge of it.

Freeing the BOE of politics in '97 may be Gordon Brown's singular best contribution to Britain. He was Chancellor of the Echequer at the time.