The reviews, aimed to better equip the Bank for future crises, will assess the BoE’s provision of emergency liquidity assistance (ELA) in 2008/9, its framework for providing liquidity to banks in general, and the Monetary Policy Committee’s growth and inflation forecasts.
David Stockton, former director of research at the Federal Reserve, will assess the MPC’s projections for growth and inflation since 2008, the analysis behind those projections and the committee’s processes.
The review will examine whether the MPC’s procedures allow it to take full account of relevant risks and uncertainties, the Court said.
Further inverstigation will also be done into the supprt offered to Northern Rock in 2007 and Bill Winters, former co-CEO of J.P. Morgan Investment Bank and member of the Independent Commission on Banking that authored the Vickers report, will look at the Bank’s money market framework for providing liquidity to the banking system.
Winters will examine the operation of the Special Liquidity Scheme established in 2008, and consider issues including whether the framework is sufficiently flexible, and the range of collateral sufficiently broad, to satisfy liquidity demands at times of crisis.
“Major changes to the operations of the Bank have already been made in the light of the financial crisis. These detailed, independent reviews will help to ensure that all the important lessons for the future have been learned,” said BoE governor Mervyn King.
King forms part of the Court along with his two deputy governors and nine non-executive directors. The reviews will begin immediately, with conclusions to be presented to the Court in October 2012.
