Bank of England under fire as it hides lender aid
The bank of England is cutting the data published on support offered to banks when they get in trouble, in the hope that secrecy will give lenders time to recover before investors find out.
But economists fear the Bank of England is becoming less transparent just as it is gaining major new powers.
Liquidity support had been revealed in the weekly Bank Return, which enabled analysts to estimate the aid being given to banks such as Northern Rock in the financial crisis.
“Revealing these operations, at least initially, could undermine confidence in the institution and pose a risk to financial stability,” said a spokesperson. The data will be published with a time lag. The Bank is also consulting on opting out of EU guidelines to publish support for banks.
“Having accrued enormous powers, the Bank should be striving to increase rather than reduce transparency,” said Henderson Global Investors’ economist Simon Ward. “Why should the British public have less information about the activities of their central bank than populaces elsewhere?”
And Adam Smith Institute economist Ben Southwood is also critical.
“By purging details of emergency liquidity support from the 170-year-old Bank Return, the Bank of England is trying to paper over its failures by simply hiding them, not to mention moving out of step with almost every major central bank,” he warned.