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Is the Treasury taking over UK financial regulations?
Storm clouds are gathering over the Bank of England with the news that Mervyn King was not consulted by the Treasury with regards to an array of imminent changes to the regulatory system. There is no doubt that the relationship between the Treasury and the Bank of England has been very strained of late and this latest announcement, which has infuriated the Treasury, will certainly not help the situation. So what exactly is going on?
In a perfect replica of the US situation, the UK government appears set to take control of the regulatory system with regards to the UK financial sector. The fact that the Bank of England, which has taken significant criticism in the past, was not consulted even in an advisory capacity is a big blow to one of the U.K.'s most prominent financial body.
There is no doubt that the Tory party will make great gains from this particular fallout as they have suggested the Financial Services Authority (FSA), which was expanded by Gordon Brown, needs to take a back seat and hand some power back to the Bank of England. Quite how this latest fallout will pan out remains to be seen but there is certainly friction between the UK government and the Bank of England.
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