§ Lord Spensasked Her Majesty's Government:
What was the legal basis for support provided by the Bank of England to certain authorised banking institutions in the second half of 1991; whether the individual transactions needed their prior approval; and whether the provision of such support was in conflict with any previous instructions by them to the Bank.
The Minister of State, Department of Transport (The Earl of Caithness)The legal basis for the Bank's operations derives from the Bank of England Act 1946 and its Charters, which permit it to fulfil its responsibilities as a central bank, including its role as lender of last resort. As the Bank made clear in its statement, though the arrangements were made with the Government's knowledge, government approval was neither sought nor needed.
§ Lord Spensasked Her Majesty's Government:
Whether in their opinion the statement issued by the Bank of England on 25th March implies that the Bank is now to be deemed to be legally and politically independent of the Treasury.
§ Lord Spensasked Her Majesty's Government:
Whether the statement issued by the Bank of England on 25th March stated the certain liabilities of the Bank did not attract a government guarantee; and, if so, whether it is now their policy to disown responsibility for the liabilities of all nationalised industries.
The Earl of CaithnessThe usual policy on nationalised industries is that liabilities do not attract a government guarantee unless one is explicitly given. As indicated in the Bank's statement, the Bank acted on the basis of its own balance sheet and without any government guarantee. The Bank does not require 79WA government approval for the use of its own resources in support operations. Were a government guarantee to be given in connection with support operations by the Bank, Parliament would be notified.
§ Lord Spensasked Her Majesty's Government:
Whether any particular member of the Government has overall responsibility for the policies of the Bank of England and if so, who.
The Earl of CaithnessHM Treasury is the department responsible for government policies bearing on the Bank's main areas of operation, and it is the Chancellor of the Exchequer who represents the Treasury in the House of Commons. However, the Bank has its own statutory responsibilities, for example under the Banking Act, and does not require government approval for the use of its own resources.
§ Lord Spensasked Her Majesty's Government:
Why the Bank of England decided to protect the depositors of some authorised banking institutions but not others such as the Bank of Credit and Commerce International.
The Earl of CaithnessThe Bank said in its statement of 25th March that its support was designed in this case to avert the possibility of more widespread difficulties in the banking system and in the wider economy. It also said that the circumstances which justify support operations of this kind are rare.
§ Lord Spensasked Her Majesty's Government:
Whether the Bank of England provided indemnities to support any authorised banking institutions during the second half of 1991; and, if so, on whose authority.