HL Deb 23 November 2000 vol 619 cc87-8WA
Lord Beaumont of Whitley

asked Her Majesty's Government:

Whether the existing method of increasing the money supply provides the commercial banks with a hidden subsidy of over £20 billion a year, as calculated in the report, Creating New Money, which was sent to Ministers by the New Economics Foundation in July. [HL4628]

Lord McIntosh of Haringey

Contrary to the report of the New Economics Foundation, banks are not provided with a hidden subsidy. Funds loaned out to customers must either be obtained from depositors or the sterling money market, both of which usually require the payment of interest.

The Financial Services and Markets Act has put in place a framework for the regulation of financial services, with the Financial Services Authority assuming the responsibility of ensuring that banking regulation is clear, serves customers' needs and promotes competition. In addition, following the publication of the Cruickshank Report in March, the Government have recently announced a package of measures to promote competition in the banking sector.