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| European banks warn against political 'intrusion' | |
| (35 minutes later) | |
| Top European central bankers have warned against politicians interfering in monetary policy, amid intense scrutiny of Mark Carney’s interest-rate strategy following the Brexit vote. | Top European central bankers have warned against politicians interfering in monetary policy, amid intense scrutiny of Mark Carney’s interest-rate strategy following the Brexit vote. |
| Andreas Dombret, who sits on the board of the German Bundesbank, told an audience of bankers in London that it was “time for a friendly reminder that central bank independence is not debatable”. | Andreas Dombret, who sits on the board of the German Bundesbank, told an audience of bankers in London that it was “time for a friendly reminder that central bank independence is not debatable”. |
| He was speaking just days after Carney, governor of the Bank of England, had said he was “not going to take instruction on our policies from the political side”. | He was speaking just days after Carney, governor of the Bank of England, had said he was “not going to take instruction on our policies from the political side”. |
| The governor made his remarks after the prime minister, Theresa May, told Conservative party conference that “ordinary working-class people” were being hurt by low interest rates as well as the electronic money printing exercise known as quantitative easing. | The governor made his remarks after the prime minister, Theresa May, told Conservative party conference that “ordinary working-class people” were being hurt by low interest rates as well as the electronic money printing exercise known as quantitative easing. |
| Hours after Dombret delivered his wide-ranging speech to the British Bankers’ Association, Mario Draghi, president of the European Central Bank, was asked about May’s remarks as he announced the bank’s latest monetary policy for the eurozone. | Hours after Dombret delivered his wide-ranging speech to the British Bankers’ Association, Mario Draghi, president of the European Central Bank, was asked about May’s remarks as he announced the bank’s latest monetary policy for the eurozone. |
| Draghi said he did not feel central bank independence was threatened and rebutted May’s criticism about the impact. “No, I don’t feel threatened. Neither is the independence of monetary policy by the governing council threatened,” said Draghi. The cause of inequality was not monetary policy but unemployment, he said. | Draghi said he did not feel central bank independence was threatened and rebutted May’s criticism about the impact. “No, I don’t feel threatened. Neither is the independence of monetary policy by the governing council threatened,” said Draghi. The cause of inequality was not monetary policy but unemployment, he said. |
| The former foreign secretary William Hague also waded into the debate about low interest rates, writing in the Daily Telegraph on Tuesday that savers were finding it “impossible to earn a worthwhile return”. Lord Hague added: “Unless [central banks] change course soon they will find their independence increasingly under attack.” | The former foreign secretary William Hague also waded into the debate about low interest rates, writing in the Daily Telegraph on Tuesday that savers were finding it “impossible to earn a worthwhile return”. Lord Hague added: “Unless [central banks] change course soon they will find their independence increasingly under attack.” |
| Dombret said politicians had removed themselves from monetary policy for “very good” reasons. | Dombret said politicians had removed themselves from monetary policy for “very good” reasons. |
| “Experience shows that political influence over central banks always leads into disorder. At the end of the day, independent central banks best guarantee price stability. Calling central bank independence into question, even only implicitly, can confuse markets as well as the public about who is in charge when it comes to monetary policy and supervisory decisions. | “Experience shows that political influence over central banks always leads into disorder. At the end of the day, independent central banks best guarantee price stability. Calling central bank independence into question, even only implicitly, can confuse markets as well as the public about who is in charge when it comes to monetary policy and supervisory decisions. |
| “Nevertheless, we have seen some criticism of central banks and their policies from politicians lately. This concerned, for example, the handling of Brexit, as well as conducting monetary policy and setting interest rates more generally.” | “Nevertheless, we have seen some criticism of central banks and their policies from politicians lately. This concerned, for example, the handling of Brexit, as well as conducting monetary policy and setting interest rates more generally.” |
| Dombret played down the impact of Brexit on the financial system. “Brexit and its possible repercussions for the City of London are unlikely to be an issue for financial stability or the financing of the EU’s real economy,” he said. | Dombret played down the impact of Brexit on the financial system. “Brexit and its possible repercussions for the City of London are unlikely to be an issue for financial stability or the financing of the EU’s real economy,” he said. |
| France’s ambassador to the UK, Sylvie Bermann, told the conference that Paris was ready to welcome banking business, as Anthony Browne, chief executive of the British Bankers’ Association, warned that banks were getting ready to move. “Their hands are poised quivering over the relocate button, with the first movements expected in the coming months,” Browne said. | France’s ambassador to the UK, Sylvie Bermann, told the conference that Paris was ready to welcome banking business, as Anthony Browne, chief executive of the British Bankers’ Association, warned that banks were getting ready to move. “Their hands are poised quivering over the relocate button, with the first movements expected in the coming months,” Browne said. |
| May has said she intends to trigger article 50 – the formal mechanism that starts the two-year negotiating period to leave the EU – in March. However, the Conservative MP Dominic Grieve, a former attorney general, told bankers that this timetable was optimistic as a legal challenge to Brexit could make it necessary for parliament to debate the UK’s exit terms. | May has said she intends to trigger article 50 – the formal mechanism that starts the two-year negotiating period to leave the EU – in March. However, the Conservative MP Dominic Grieve, a former attorney general, told bankers that this timetable was optimistic as a legal challenge to Brexit could make it necessary for parliament to debate the UK’s exit terms. |