In 2008 , LWM undertook feasibility work on reform of the way central banking works in the UK. We assembled material for arguing that the UK central bank should be more representative of the various economies that make up the UK.
We saw the need for a bank that was less merely a creature of Downing St and Westminster (see our previous work on this – Would an American model be better?)
In this recent crisis, what none of our supposedly national media have noticed is that the further a bank has been based from London,the more likely it is to have ended up in a mess. (see our page on regional banking.)
We were looking at models of regionalised representation such as can be found in Europe, Canada and the USA. While none of us would ever claim to be able to abolish ‘boom and bust’, we hoped that through more responsive and proportionate control over inflation and credit, we could allow the UK economies to find their way towards a more sustainable path: one on which the local economies could come into their own and be a stable base on which to come to terms with our resource predicament and climate change. We thought that a central bank made up of representatives of different parts of the country would be more consistent at implementing a Prosperity and Inflation framework such as we have been proposing.
We were active in seeking to foster the discussion, but increasingly, decision-makers and commentators’ attention was focused on the mechanical responses to bank failure and bail-out rather than the path to future success and sustainability. No one was publically talking about the government taking a stake in the banks’ ownership as a way forward until only days before it actually happened.
Now, faced with what has happened, as far as our feasibility study on the ‘Bank of Britain’ is concerned, one can see that we have to conclude that reform is needed and if radical change has ever been possible it will be in the coming period. Parliamentary time for this will have to be ‘blocked in’ in 2010, by whoever has the majority then. We will need to put more representative and responsive central banking in place before we can get a more responsive commercial banking in place on our High Streets.
Localise WM’s work on the Bank of Britain project, along with our campaign for a regional prosperity and inflation framework, has been funded by the Andrew Wainwright Reform Trust.
Recent LWM media coverage of this issue
Birmingham Post coverage, November 6th 08 – with particular reference to regionally representative banking in relation to the financial crisis
Birmingham Post coverage, March 19th 08 – with particular reference to comparisons between UK and US central banks and inflation indices in the context of the credit crunch
Birmingham Post coverage, August 8th 07 – with particular reference to competitiveness, inflation and reform of the Bank of England
Birmingham Post coverage, March 9th 07 – with particular reference to inflation, housing and reform of the Bank of England