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Monday, January 14, 2008

Calls for greater powers for Bank of England

Calls have been made for greater powers to be given to the Bank of England in a new act that is hoped will prevent another Northern Rock crisis.

It is the Bank of England and not the Financial Services Authority that should have the power to intervene when a bank begins to struggle.

This would see an end to the tripartite system which exists at the moment.

There are also calls for Bank of England governor's to be given an eight-year term in the future.

These are the views of the Conservative party in the wake of the Northern Rock crisis.

The Northern Rock affair has been a costly exercise for the UK government and many believe it has been handled badly. The beleaguered lender is on the brink of being nationalised as any private buyers have been unable to agree terms with the lender.

It is also believed that due to the tough credit market the two parties who were interested in purchasing the bank would be unable to raise enough funds to pay back the £25 billion that Northern Rock has borrowed from the Bank of England.

If Northern Rock is nationalised it would be an embarrassing situation for the UK government and also the UK as a financial hub of the world.

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