© Reuters. FILE PHOTO: Flowers bloom in front of the Bank of England, London, Britain, August 1, 2018. REUTERS/Peter Nichols
By Andy Bruce
LONDON (Reuters) – The Bank of England told Reuters on Wednesday that the Bank of England will no longer hold informal briefings between policymakers and individual private sector firms, as scrutiny of the links between central banks and finance grows.
The move, a permanent move aimed at improving the transparency of market information collection processes at the Bank of England, comes on the heels of growing concern about similar practices at other central banks.
It represents another step in lifting the veil that sometimes hangs over the sometimes secret world of central banks and a further break with the image of the Bank of England from decades and centuries ago, when meetings with private banks in smoke-filled rooms were the norm and its conduct of politics opaque.
Last month, the European Central Bank faced calls to end its closed-door meetings with private companies after its chief economist was reported to have disclosed an unpublished inflation forecast at one such event.
The European Central Bank partially disputed the FT’s report.
Meetings between members of the Bank of England’s Monetary Policy Committee and private banks have been described as a way for the Bank of England to gather information about the economy and financial markets.
Policy makers’ comments should be limited to repeating the general position of the Bank of England, according to the institution’s rules.
The BoE also publishes details of these meetings in the MPC members’ schedules which are made available to the public after the meetings have taken place.
But these events also led to speculation and rumors among financial traders. Last week, some Twitter (NYSE:) users spoke of a MPC member meeting with a major bank and its clients, something the BoE declined to comment on.
While briefings with individual banks will stop on monetary policy outlook, the Bank of England has regular contacts with banks in its role as regulator of Britain’s financial system.
Conflict of interest?
In the United States, Federal Reserve Chairman Jay Powell and other Fed officials regularly meet with Wall Street chiefs and other financial market leaders, but they usually hold hearings or discussions on non-policy matters, not briefings.
The Federal Reserve’s communications policy discourages policy makers from conducting private briefings that may appear to give out private information.
Last month, two Federal Reserve officials had to sell their individual holdings of stock by the end of the month to address the appearance of a conflict of interest.
Earlier this year, European Central Bank chief economist Philip Lane was forced to immediately suspend one-on-one meetings with investors after policy announcements, in part due to public criticism of such engagements. But he still met with groups of economists.
The Bank of England will continue to hold informal briefings with a group of economists from private finance companies following the quarterly monetary policy report.
These meetings differ from closed meetings with individual banks in that dozens of attendees from a wide range of institutions attend.
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