Former monetary policy committee external member Professor Willem Buiter has hit out at the “misconceived” financial stability reforms, saying the Chancellor should have a key role in maintaining stability.
Under current plans, the Financial Policy Committee will be responsible for financial stability and will be chaired by the governor of he Bank of England.
Giving evidence to the Treasury select committee this week on the accountability of the Bank of England, Buiter said the Chancellor should chair the committee. He said: “Reform of the financial stability management in this country is disastrously misconceived. The first mistake is the Treasury should be at the centre of financial stability, however it is now on the sidelines.”
Buiter added the Prudential Regulation Authority should not be handed to the “overburdened” Bank of England, warning it risks being “captured” by the firms it seeks to regulate.