Democratic control of monetary policy

The governance of the Bank of England should be outlined in the constitution, along with rules concerning the issuing of currency.

John Z Apr 5, 2015

Other than a general statement, I don't think actual rules/regulations can be written into the Constitution due to the flexible/growing nature of monetary policy/monetary needs.  As we saw with the banking crisis/recession in 2008, there needs to be flexibility to adjust to the times.

James Doran Apr 7, 2015

No, rules concerning the issuing of currency are entirely relevant to the banking crisis - banks and building societies were/are issuing new £s when making loans. The sectoral mix of this allocation of resources in of crucial importance, for example.

Christine Farquharson Apr 17, 2015

Hi JamesDoran (or anyone else!), do you have specific wording to propose for this idea? With just one day left in this phase, it's important to start to move towards concise propositions that we can bring forward to the convention.

Drawing on the community's posts from the last phase, possibly something like

'Decisions regarding overall economic policy, including monetary policy as put forward by the Bank of England, should be taken in accordance with a democratic mandate.'

Does this capture the spirit of what you are proposing? There hasn't been too much concrete discussion here so my summary might be off...

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Malcolm Ramsay Apr 17, 2015

I've proposed some rules regarding the monetary system in my post 'Responsibility to provide a stable medium of exchange' – https://constitutionuk.com/post/85294 –  and I've mentioned some duties of an 'appropriate independent body'. However, I've not said anything about how that body should be consttuted. Have you any wording in mind for that, James?

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Christine Farquharson Apr 8, 2015

As an aid to discussion in this phase, here's a quick summary of some of what was said in phase 1. Remember to keep voting on ideas and comments, as this will tell the idea authors which modifications the community would like to see in their revised proposals!

- JamesDoran's comments: It's not clear why the central bank leadership shouldn't be elected, ideally directly but at least by parliament (1 up). This would need to be in the constitution to prevent governments giving up control of monetary policy (1 up). The election could be a combination of direct and indirect. 

- Andrew Bulovsky: Voters already delegate a lot of authority to MPs, so it might make sense (from the point of view of reducing campaigning and ensuring that the people making the choice have adequate information) to have MPs vote on the central bank leadership (2 up)

- cosimomontagu: Citizens have a right to have a say in economic policy decisions and systematically important financial institutions like the Bank of England. The constitutional clause doesn't necessarily need to be detailed, but the principle should be established. (1 up)

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