Mandelson asks BoE to share powers

July 7, 2009 - PRLog -- London (Shakespeare Finance) 7th July, '09: In an argument about whether the Bank of England should be granted more powers, Lord Mandelson spoke to the Treasury and the Financial Services Authority. This is due to the fact that Britain's banks are facing sudden surfacing of bad debts.




The Secretary of State for Business, addressing to the British Bankers' Association on 29th of last month said that he does not supports 'twin peaks' system when it comes to an issue for the Bank taking a more direct role in financial stability. He believes in the lesson of the last year, where he needed a stronger regulator for support system.

He expressed his unhappiness and said: "I never experienced this feeling of distrust and anger between the financial sector and the economy".

It is expected that the remark of the Business Secretary has strained relations between the Bank and the Government, which have turned bitter in recent weeks. Mervyn King, the Governor of the Bank of England, has demanded for the required "toolkit", so as to implement the statutory duty it has been given under the new Banking Act.

The Number 10 spokesman later said Mr King would see the Financial Services Strategy, which is effective from this week.

As a result the Treasury wish Bank to share its legal role with the FSA and it would be held responsible if things went wrong again. Ministers are taking too much tension due to the concentration of too much power over economic decision-making given to the hands of the Bank's unelected officials.

97 per cent of banks' net balance and 98 per cent of building societies said they have seen an increase in the number of bad debts in the second quarter of this year which is expected to continue for the next three months.

Lord Mandelson underline the statement in his speech and expressed his dissatisfaction saying: "Credit must be made available and that at reasonable price."

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