THE BANK of England should face more direct democratic oversight and take action to become more accountable and transparent, the Building Societies Association (BSA) said yesterday, voicing concern over powers the Bank is being given.
Its Financial Policy Committee (FPC) is set to gain wide ranging macroprudential tools, allowing it to determine the levels of capital banks must hold overall, and to vary capital requirements by sector.
Adrian Coles from the BSA warned that this gives the Bank great power over credit, without extra accountability. “Because of the wide ranging impact this has, the Bank of England will be one of most powerful unelected entities in the democratic world,” he told the Treasury Select Committee.
Coles also said it may be better if the FPC had more direct controls – for example the power to limit mortgage loan-to-value ratios when a bubble is growing rather than change capital requirements, to make sure consumers can see how credit is being restricted.