For those interested in deckchairs, there is a lot of reshuffling of them going on in British financial regulation, outlined in a Treasury consultation document today. A short summary is: the Bank of England will have much more power to do essentially the same things that the tripartite authorities planned under the previous government.

The existing tripartite Council for Financial Stability and the Bank’s Financial Stability Committee will effectively be merged in function and rebadged as the Financial Policy Committee of the Bank. Like the existing councils, the new FPC will have representatives from prudential regulators and from Treasury. It will also have some outside representation on the 11-strong Committee which will meet four times a year other than at times of crisis.

On the substance of the FPC’s remit, there is a lot of stuff in the Treasury consultation about the way the FPC will operate its tools and a bit of fretting about interaction with monetary policy, but there is still rather little on the macro-prudential tools the FPC will be given. Obviously, this is the important bit and the paucity of information here is disappointing, since it does not go much further than the Bank of England’s discussion document on the role of macro-prudential policy from last November.

But the tools the government is thinking of giving the FPC are the following: Read more