Her Majesty The Queen has been pleased to approve, under the Bank of England Act 1998, the appointment of Charles Bean as a Deputy Governor of the Bank of England for Monetary Stability, for a period of five years starting on 1 July 2008. Alongside this the Chancellor has announced that, in future, the Government will advertise vacancies for the Governor and Deputy Governors of the Bank of England and also for external members of the MPC, consistent with the principles of open competition. Having consulted with the Governor and Sir John Gieve, the Chancellor has today also set out proposals to enhance the role of the Bank of England in preserving financial stability. These proposals will be included in the Banking Reform bill, to be introduced later this year.
The Chancellor's proposals focus on:
- provision of a statutory responsibility for financial stability for the Bank of England;
- changes to the governance structures of the Bank of England, to support the Bank and the Governor in the exercise of these new responsibilities, including the establishment of a new Financial Stability Committee of the Court; and
- provision of a range of tools for the Bank of England to enable it to carry out its responsibility in this area. This will include a leading role in the implementation of the new special resolution regime (SRR), should it be triggered by the FSA, including powers related to deploying and implementing the SRR tools.
The new legislation will change the role of the Bank and, within that, the Deputy Governor for financial stability from Spring 2009.
Taking this forward will require a long-term commitment. Sir John Gieve has indicated that he would not wish to serve a new 5-year term at the Bank and has decided therefore to step down once the legislation comes into force. The Governor and Chancellor have asked Sir John to continue in the job of leading this reform process until then, at which point the position will be advertised under the new process.
Further details are set out in the Chancellor's letter to the Treasury Select Committee available at: http://www.hm-treasury.gov.uk/documents/financial_se rvices/fin_stability/fin_chx_selectcommittee.cfm
The Chancellor said:
"I am delighted to announce the appointment of Charlie Bean as Deputy Governor for Monetary Stability at the Bank of England. He is a world-class economist with a great depth of experience in both academia and policy making environments. Appointing an economist of Charlie's calibre is particularly important amidst the significant global economic challenges the UK economy is presently facing.
I would also like to take this opportunity to thank Rachel Lomax for the contribution she has made to the public sector throughout her distinguished career, including as Permanent Secretary to a number of Government departments and as Deputy Governor.
The wider reforms that I am announcing today will ensure that the Bank of England will in future have a much enhanced role in the preservation of financial stability. Sir John Gieve has made a huge contribution to public service over many years both in the civil service and at the Bank. I am extremely grateful to him for leading the Bank's work to develop these proposals for reform and for all his work in the demanding circumstances of the last year."
Mervyn King said:
"I am delighted that the Treasury has asked Charlie Bean to take on this vital role overseeing our monetary policy work. I am extremely grateful to Rachel Lomax for her contribution to the MPC, her tireless devotion to the work of the Bank and her personal support and wise counsel over the past five years. I am also very grateful to John Gieve for his hard work and loyalty. In particular since the events of last summer, John has played a major role in delivering the new framework, and I am pleased he is staying until the Bill is law. I wish them both well in future." Charlie Bean commented:
"As the Deputy Governor responsible for overseeing the Bank's monetary policy work, I am committed to ensuring that the MPC is properly equipped to steer the economy through the challenging times ahead."
The Bank of England is announcing Charles Bean's successor as Executive Director and Chief Economist at the Bank of England in parallel to this announcement.