|
 Carney arrived from Canada last July as an outsider with a mandate
to shake up the 320 year-old institution, from monetary policy to
its relationship with the powerful banks of the City of London.
A group of influential members of parliament wants Carney to change
the way the BoE polices itself too.
Their long-standing frustrations with what they say is the Bank's
outdated governance system broke out again last week when the BoE
suspended an official amid an internal review into whether Bank
staff turned a blind eye to possible manipulation of key rates by
foreign exchange traders.
The meetings at which the BoE and traders discussed possible
problems in the market took place as far back as 2006, seven years
before Carney's arrival in London.
But lawmakers are angry that the Bank's Court of Directors — its
governing board — only asked its oversight committee to investigate
last week. Carney may also be asked to show how quickly he responded
to the first signs of the case last year.
Mark Garnier, a member of the Treasury Committee which will hear
Carney on Tuesday, said any perceptions that the BoE was not tough
enough on tackling problems could damage London's reputation as a
financial center, potentially weakening Britain's hand in European
Union talks over financial reforms.
"We will be asking the governor what steps he is taking to bring
management arrangements and committee structure up to the standards
of the 21st century," Andrew Love, another member of the Treasury
Committee, said.
Former finance minister Alistair Darling said in 2011 that the
governance arrangements were antiquated. "It is all to do with the
governor being some sort of Sun King around which the Court
revolves," he said.
The Court has since gained new oversight powers. But critics say it
still lacks clout. Its chairman David Lees acknowledges he plays
second fiddle to the BoE governor.
"It's lower down the pecking order than you would be used to in the
corporate sector," he told the Evening Standard newspaper last
month.
The Sunday Telegraph newspaper reported the Court's oversight
committee may name a judge, academic or senior financial industry
executive to run its investigation.
There could also be tough questions for another BoE policymaker
official due to attend Tuesday's hearing.
Paul Fisher, a member of the Monetary Policy Committee, was
previously BoE's head of foreign exchange and he chaired the Foreign
Exchange Joint Standing Committee, a forum for Bank officials and
market players to discuss market issues.
[to top of second column] |
It was at a sub-group of that committee that dealers raised concerns
with BoE officials as early as July 2006 over attempts to move the
market around the time of daily benchmark fixings.
Last week, when it announced the suspension of the unnamed official,
the BoE stressed the importance of staff keeping records and
flagging concerns to managers. It also said it had found no evidence
that its staff colluded in any manipulation.
Tuesday's meeting was originally scheduled as a regular hearing on
monetary policy. Carney is likely to face some criticism over the
way the BoE scrambled to revamp its policy of signaling the likely
path of interest rates last month, after it misjudged the speed of
the labor market's recovery, leading to questions about the value of
the policy that Carney introduced.
MORE CHANGE COMING?
The Canadian has already made his mark on the BoE in ways beyond the
forward guidance revamp of monetary policy. He has established a
less hostile tone towards bankers than his predecessor Mervyn King
and created the new post of chief operating officer to oversee an
internal Bank shake-up.
Consultants McKinsey are working on ways to pursue that
modernization drive and its findings are expected soon.
Lawmakers hope that on the list will be the BoE's Court.
John van Reenen, director of the Centre for Economic Performance at
the London School of Economics, said a natural extension of Carney's
push to improve transparency at the Bank would be to bring more
clarity to its internal supervision.
"He's not as respectful of venerable British institutions as many
people are, and from time to time you want to take a cold, hard look
at whether the existing set of institutions really is fit for
purpose in a modern age," he said.
"He seems to be a person who is prepared to make those kind of
changes."
(Additional reporting by Jamie McGeever
and David Milliken; editing by Louise Ireland)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
