Bank of England Act proposed

Dramatic Bank of England reforms have been proposed by the UK’s Conservative opposition party

LONDON – A new Bank of England Act has been proposed by the Conservative opposition party to strengthen the UK’s central bank’s powers – allowing it to act sooner and more decisively to prevent another bank run.

The proposal follows the Treasury’s announcement of a plan to strengthen the powers of the Financial Services Authority (FSA) – the third institution comprising Britain’s tripartite financial system.

The government, the FSA and the Bank of England have all received criticism for their reaction to the Northern Rock crisis, including pressure for the Bank’s governor Mervyn King to step down.

Conservative leader David Cameron urged chancellor Alastair Darling to confirm the reappointment of the Bank’s governor Mervyn King, which the government has yet to do.

Cameron said the Northern Rock crisis and now King’s unconfirmed status as governor highlighted the need to give the Bank more powers to act and confirm its independence from government.

So far bidders have failed to stump up the £15 billion needed to buy out Northern Rock, with growing speculation about a government nationalisation of the bank.