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Banking Bill

As the right hon. and learned Gentleman knows, we are proposing—I set this out yesterday—to take a stake in the merged bank. The decision to go ahead with the merger was primarily taken by the two boards; they considered it again at the weekend. It is still my view that the merger would not just be beneficial for them—that is their decision primarily; in the interests of financial stability, the two banks together would be stronger than the separate organisations. That remains our position, but, primarily, the decision to merge was taken by the two banks because they thought that to do so was in their best interests. I want to get on to the Bill. First, I remind the House of the basic supervisory architecture that has been in place for the past 10 years and remains so. In addition to its prior existing functions, the Bank of England has, since the Bank of England Act 1998, also been responsible for monetary policy. It has a responsibility for ensuring financial stability, but that is not a statutory responsibility, and that is one of the things that the Bill seeks to change. The FSA brought together eight or nine different regulators. That was the right thing to do, and I do not think that anyone would argue for going back to the situation before then. Interestingly, the United States is seeking to follow that model, with legislation being proposed there to do the same thing. The Bank of England, the FSA and, of course, the Treasury—because of the wider public interest and financial interest—will remain essentially as they are. The one change that we propose is to give the Bank of England a statutory duty in relation to financial stability, and that is very important.