By Andy Bruce
LONDON, Oct 21 (Reuters) - The Bank of England should be
given more power to steer lending in Britain's economy and
influence government spending during a downturn, a think tank
said on Monday.
After more than a decade of low interest rates since the
global financial crisis, central bankers across advanced
economies are concerned that they're less able to boost the
economy when the next recession comes.
Positive Money, a think tank whose work has been endorsed by
the opposition Labour Party and others in recent years, said
closer coordination was needed between the BoE and the
government, with the efficacy of quantitative-easing in doubt.
Last week, Gertjan Vlieghe, a member of the bank's Monetary
Policy Committee, cast doubt on the effectiveness of government
bond purchases in future, and suggested the BoE could buy
private-sector assets that were under stress.
Positive Money said the BoE and government should create a
new credit policy unit so the BoE can influence lending, and the
central bank should also be able to outline its expectations for
the government's fiscal policy.
Currently, the BoE avoids commenting on fiscal policy, and
it has only bought nominal quantities of corporate debt, to
avoid steering lending towards particular businesses or sectors.
The BoE is currently accountable to parliament through the
Treasury Committee of politicians. Citizens should also be able
to have direct input, the report said, and there should also be
periodic debates in parliament over the BoE's mandate.
"In the decade since the crash, the Bank of England has been
handed powerful new tools such as quantitative easing and a new
remit on financial stability," said Fran Boait, executive
director at Positive Finance.
"But this hasn't been matched with an increase in
accountability and democratic oversight, which has led to a
widening gulf between the Bank and the public it is supposed to
serve."
Last year, a report commissioned by the Labour Party
suggested the BoE could target productivity to help boost the
economy if it wins power, although some economists said that was
a task better suited to the government.
The Positive Money report also said recruitment criteria for
the BoE's Monetary Policy Committee should be broadened to
include applicants from outside the world of finance and
academia, such as trade unions or civic organisations.
(Reporting by Andy Bruce)