Minouche brings immense international, managerial and economic experience from a career that has spanned academia, the public service and the IMF. She will help lead the Bank’s efforts to reshape core markets and the Bank’s relationship to them. Second, through its intellectual leadership and international relationships, the Bank can help complete the G20’s ambitious programme of financial reform including building resilient financial institutions, ending too big to fail, making derivative markets safer and transforming shadow banking to market based finance. Sir Jon Cunliffe, one of the original architects of the Financial Stability Board, is leading this effort. The job is too big for one person and requires a well-resourced and focused international strategy that draws on all areas of the Bank. That is why we are pooling our prudential policy teams in a single directorate and bringing together our international teams to increase insight and impact. By acting as One Bank we can increase our international impact and ensure that the UK’s financial sector can be both a global good and a national asset. Building on the success of the past 25 years On the face of it the recent enlargement in the Bank’s responsibilities represents a return to the broader role of the Bank of the past. If there are some similarities in roles, how we will discharge them will be fundamentally different.
After the event we will have a better idea of which way we got things wrong. It is a near certainty that four or five years from now the monetary policy that is set over the next year will, with the benefit of hindsight, look very likely to have been too loose or too tight. Many then will talk about the big mistake the MPC made in late 2010 and the first part of 2011. If we tighten too quickly it will be a story of “myopic MPC learnt nothing from events of 2008”; if growth and inflation look stronger than I now think is the most likely outcome it will be “MPC completely failed to see what was obvious to nearly everyone – that inflation was out of control”. But the only sensible thing to do is to look at all the evidence we have today, and balance the risks. References Admati, A, DeMarzo, P., Hellwig M, and Pfleiderer P. (2010) “Fallacies, Irrelevant Facts, and Myths in Capital Regulation: Why Bank Equity is Not Expensive”. Stanford University Working Paper No. 86. Akerlof, George A. (1970), “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism”. Quarterly Journal of Economics, 84(3), pp. 488–500, 1970. Bank of England (2010), Financial Stability Review, June 2010, page 58–60. Bank for International Settlement (2010), “An Assessment of the Long-term Economic Impact of Stronger Capital and Liquidity Requirements”.