20 Years of an Independent Bank Of England

The UK's central bank is celebrating twenty years of independence - and of course, politicians and pundits are taking the opportunity to mock it. As Churchill is supposed to have said of democracy, an independent central bank may seem like a terrible idea, until you compare it to the all the other options.

The Bank of England is holding a two-day conference to mark the anniversary and has this to say on its website.

"The 20th anniversary is an appropriate time for us to reflect on the theory of central bank independence, its practical application and its future. As part of this, we are holding a conference on 28 and 29 September 2017 discussing these topics.

The conference is an opportunity for us to talk to other central bank practitioners, observers and, indeed, critics to take stock of our experiences of operational independence and think about the challenges, questions and opportunities that lie ahead."

Prime Minister Theresa May said free markets and an independent central bank were important, to preserve us from "the mistakes of yesterday's ideologies."  Governor Mark Carney said that he was not omnipotent, and could not protect the country from the economic consequences of Brexit. (We think that means he was agreeing with Mrs May. Some of the Cabinet may not see it in that light.)

 Gordon Brown, who presided over Bank of England independence as Chancellor of the Exchequer in the first Blair administration, praised himself yesterday for making a good decision. And from the other side of Parliament, the Conservatives' John Redwood said the Bank was not independent, it was subject to Parliament, and was doing a bad job. (We'd say those criticisms cancel each other out, and make an argument in favour of independence.)  

The conference proceedings are being uploaded to YouTube. Here's Thursday morning's session. 

As Governor of the Bank of England, Mark Carney has proved to be pragmatic, rtenacious, not easily swayed by rhetoric, and a very articulate critic of the politicians. On Brexit, Just about the only thing Leavers and Remainers agree on is that the Bank's strategy for responding to the referendum vote was very well handled, and proves how right / wrong (delete according to your beliefs) the electorate were to vote as we did.

On the whole, we rather like the Bank of England we've got. Things could be a lot worse.

Further reading

How is the Bank of England independent of the Government?