New Bank of England Head Stirs Talk of Independence
MEMBERS of Britain's financial establishment are waiting to see whether Eddie George, newly appointed governor of the Bank of England, will obey government economic and financial policy as closely as Prime Minister John Major desires.
The appointment of Mr. George to succeed Robin Leigh-Pemberton, the central bank's governor since 1983, followed months of debate over whether the bank should be given independent status in line with Germany's Bundesbank, the Banque de France, and some other European central banks.
George, until now the bank's deputy governor, told a London press conference last week in the sometimes-obscure language of central bankers: "If independence has to be in some sense in opposition to government, I don't think I want it."
A source inside the bank, however, forecast that its new governor would "put his personal views forcefully to government policymakers" whenever necessary, and would "speak his mind when he thinks it appropriate." The new governor is said by a wide range of banking sources to favor greater independence for "the Old Lady of Threadneedle Street." So too is Rupert Pennant-Rae, who leaves his post as editor of the Economist magazine to become deputy governor.
Mr. Major seemingly put an end to the argument, saying he was "against making the bank independent at this stage."
In recent months editorials in the Economist magazine have advocated cutting the Bank of England's ties to government, and Mr. Pennant-Rae reiterated that view a few hours after he was appointed deputy governor.
George is on record as saying that the bank should have operational independence but be accountable to Parliament.