THE Bank of England’s “centralised and hierachical” governance structure is damaging its effectiveness, according to three independent reports.
In further criticism they found its “vulnerable” forecasting processes lack detail and have become “noticeably worse” since the onset of the financial crisis.
But the central bank was praised for its “effective” actions at the height of the economic collapse.
In the first independent review, Ian Plenderleith, said: “The bank’s ELA (emergency liquidity assistance) operations did not in any sense resolve the financial crisis. Nor could they have done so, on their own.
“But they were an essential plank in the structure of official support that was able in the end to return the financial system to a degree of stability.”
However, he also suggested there was greater focus on systemic risks in the run-up to the financial crisis rather than on the vulnerability of individual banks.
Meanwhile, Bill Winters, who sat on the Independent Commission on Banking, questioned the “robustness” of internal BoE governance.
Calling into question the bank’s “centralised and hierachical” system, he said that less senior BoE staff had “a tendency to filter recommendations in such a way as to maximise the likelihood that senior staff will find the recommendation palatable”.