§ Mr. BoswellTo ask the Chancellor of the Exchequer if he will list the various differences in the arrangements for operational independence by central banks in the conduct of monetary policy among those G-7 countries which have introduced such arrangements, from those applicable under his proposals in the United Kingdom. [14511]
§ Mrs. Liddell[holding answer 10 November 1997]: The proposed arrangements by the Chancellor to give the Bank of England statutory operational responsibility over monetary policy are along similar lines to the arrangements in other G-7 countries. Most countries have moved to give central banks greater operational 512W responsibility and to focus monetary policy on price stability. However the arrangements for the UK are a British solution for British needs.
The Monetary Policy Committee of the Bank of England has operational responsibility to achieve a monetary policy target set by the Chancellor. The Chancellor retains the right to override the operational autonomy of the Bank in extreme economic circumstances and if it is in the public interest.
Arrangements for other G-7 countries give varying degrees of independence to the central bank. The most independent is the Bundesbank, which has full independence from the Government and is required neither to consult nor report to Parliament. The Banque de France has recently been reformed to give it full independence over monetary policy decisions and bring its arrangements into line with the proposed arrangements for the ESCB.
In the US, the Federal Reserve has discretion over both the goals and instruments of monetary policy; but it is required to give a full account of its policies to Congress.
The Bank of Japan Law has been revised recently to establish the independence of the Bank of Japan (which comes into effect from April 1, 1998), but is designed to ensure that Government views are heard. The Government retains the right to attend and make proposals to the Policy Board.
The Bank of Canada also has considerable discretion over the goals and instruments of monetary policy. But the Canadian Government has ultimate responsibility for the direction of monetary policy and, in case of disagreements, retains the right to issue a directive to the Bank in respect of monetary policy.
The Banca D'Italia also has considerable autonomy. The Governor sets autonomously the official discount rate, and neither Parliament or the Government can interfere in this process. However the Bank's annual monetary policy objectives must be approved by the Inter-Ministerial Committee for Economic Planning.
§ Mr. Heathcoat-AmoryTo ask the Chancellor of the Exchequer what estimate he has made of the costs of converting to the Euro for(a) Government, (b) retailers, (c) manufacturers, (d) the financial sector, (e) the public and (f) the economy as a whole; and if he will make a statement. [13718]
§ Mrs. Liddell[holding answer 3 November 1997]: The cost of converting to the euro would depend on the timing and detailed nature of the transition. The Chancellor has set up a Standing Committee to consider how the United Kingdom would approach the transition to the euro if and when the United Kingdom joins, and he is receiving advice from business sources through a Business Advisory Group looking at the practical implications of economic and monetary union.
The Government believes that, in principle, the United Kingdom should join a successful EMU provided the economic benefits of joining are clear and unambiguous. The Chancellor set out the five tests against which the economic case will be judged. The Treasury's assessment of the five economic tests is available in the Library of the House.