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Banking Bill

Clause 235: Weekly return Debate on whether Clause 235 should stand part of the Bill. I have given notice that we wish to oppose Clause 235 standing part of the Bill. This clause removes one of the few regular sources of information about what is going on in the Bank and replaces it with absolutely nothing. Since the Bank Charter Act 1844, the Bank has been required to produce a weekly return, which is in the form of a weekly balance sheet. The underlying rationale for removing this requirement is, I understand, to allow the Bank to conceal covert support operations on the basis that public knowledge might increase the likelihood of financial instability, either generally or in a specific case about the bank or banks being supported. On the other side of the coin, financial markets need information about the financial system if those markets are to work efficiently. Why does the possibility, which is probably remote, of a covert bank operation supplant the ongoing need for market transparency? In addition, we are aware that the Government are actively considering having the Bank print more money in the face of the recession and the possibility of deflation. Do we really want the Bank to move towards giving even less information about what it does at such a critical time for the economy? This is exactly the time when we need more information, not less. Of course, we support the general aim of not disrupting financial stability, but we are far from convinced that the gains from this clause outweigh its disadvantages. We also disagree with the all-or-nothing approach taken by the Government. Until the mid-1990s, the Bank took advantage of the so-called banking exemption from its accounts showing a true and fair view, and it held inner reserves, a practice which the banking community had generally abandoned somewhat earlier. The rationale for keeping the exemption was to conceal a covert support operation. The world did not come to an end when the Bank stopped having inner reserves and stopped having the ability so easily to conceal a support operation. I wonder whether it is right that we should move from having regular information about the Bank’s financial position and the other matters that are covered in the weekly report to having absolutely no information. The Minister might like to reflect on whether there is a middle way so that, instead of having a weekly report, there could be a requirement for a monthly report or a weekly report delayed for a period. In another place the Minister suggested that this was a matter for the Bank, but we reject that proposition. It is not customary to let bodies judge for themselves what is right in the name of transparency and public accountability. That is a decision that Parliament, and not the Bank, should take. I look forward to hearing whether the Government are really satisfied with completely removing this reporting requirement and replacing it with nothing.