Bank proposes 'simple' method to tame credit
The Bank of England's executive director for financial stability, Andrew Haldane, has justified bank plans to regulate the credit markets, saying that there is "relatively concrete evidence of the credit cycle having real and damaging effects on output".
Mr Haldane said that this "provides a justification for state intervention to help co-ordinate lending expectations and actions by banks".
The Bank is planning to set up a Financial Policy Committee to operate "macroprudential policy", mirroring the Monetary Policy Committee's work in setting interest rates to control inflation.
Mr Haldane said it was necessary to "acknowledge that spillovers can also extend across borders and beyond the scope of current regulation into the shadow banking system".
Macroprudential policies should be simple "to prevent confusion about the objectives and transmission channels", he added.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies