Mark Yallop is due to join on 1/12/14 and David Belsham on 1/5/15. 5  http://www.bankofengland.co.uk/pra/Pages/about/default.aspx. 6  See for example, AJ Hughes Hallett (1989) ‘Econometrics and the Theory of Economic Policy: The TinbergenTheil Contributions 40 Years On.’ in Oxford Economic Papers, vol. 41, issue 1, pages 189–214. 2  BIS central bankers’ speeches  there should be at least as many independent and effective policy instruments as there are independent policy targets. By an instrument I mean any policy setting which can be changed: such as Bank Rate or the required amount of capital to be held by firms. To be satisfied, the Tinbergen rule requires that the policy tools being used must each have an impact on at least one of the objectives in sufficient size to make a substantial contribution towards achieving it. And that the pattern of effects of one tool on all objectives cannot be perfectly reproduced by changing any other tools singly or in combination ie the policy tools are each unique in their precise pattern of effects. Additional conditions are necessary if the objectives are assigned to different policy making bodies. So I will add a number of other sufficient conditions to cover this case. •  Each policy tool should be assigned to meeting a target that it is relatively effective upon (ie to exploit comparative advantage). This may seem obvious, but is less so if one is uncertain about a particular policy’s effectiveness.
Controls over the rating system  Of course, a ratings system is useless without the necessary system of checks and balances, or control structure, which is the second area I will discuss as needing banks’ attention. Banks must have the proper controls in place to ensure that the rating system is performing as intended, and that its ratings are accurate - that is, that a "5" rating really is a "5" and that a "7" really is a "7." There are at least three major structural elements that are necessary in any good ratings system control structure: •  The first is independence in the process of assigning ratings; the people assigning ratings (and even approving loans) should be independent of the marketing department and revenue producers. •  A second check is having a subsequent review of ratings by an independent review group. This group is charged with reviewing ratings after the fact - that is, after origination - for accuracy, timeliness and consistency. Moreover, both the ratings system and individual ratings should be subject to review by the internal audit department. •  A third and final critical element is transparency in the ratings process. Here, what we would expect is that the ratings criteria are objective, and that the bank has in place policies and procedures that clearly document the rationale for each ratings category. The more transparent the process is, the easier it is for a third party to audit the ratings through some form of replication of the analysis.