The Bank of England, established in 1694, is a corporation wholly owned by the UK government. Parliament, through legislation, has given the Bank substantial powers to pursue its mission to promote the good of the people by maintaining monetary and financial stability. It is therefore vital that the Bank is well-governed and accountable to both Parliament and the public.
The Bank demonstrates its accountability to Parliament principally through the House of Commons Treasury Committee, before which the Governors, Executive Directors and external MPC and FPC members regularly appear.
The Bank is overseen by a unitary board of directors, known as Court. Court is responsible for the management of the Bank’s business – setting and monitoring the Bank's corporate strategy and taking key decisions on resourcing and appointments. Court delegates the day-to-day management of the Bank to the Governor and through him to other members of the executive. Members of Court are appointed by the Crown. One of the non-executives is designated by the Chancellor of the Exchequer to chair Court.
The Oversight Committee of Court, consisting solely of non-executive directors and supported by an Independent Evaluation Office, reviews and reports on all aspects of the Bank’s performance.
The major policy committees of the Bank, all of which are chaired by the Governor and have external members, are the Monetary Policy Committee (MPC), the Financial Policy Committee (FPC), and the Board of the Prudential Regulation Authority (PRA).
The MPC is a Committee of the Bank, operating under objectives set in legislation and to an annual remit set by the Chancellor.
The FPC is a sub-committee of Court and its objectives are set by reference to the Bank’s Financial Stability Objective. The Bank’s Court is required by statute to prepare and publish a Financial Stability Strategy, in consultation with the FPC and HM Treasury. At least once a year, the Government must make recommendations about the FPC’s responsibilities for financial stability, to which the FPC must comply or explain.
The PRA is a subsidiary of the Bank with a Board that is responsible both for delivering the PRA’s objectives and for the direction of the subsidiary company. The PRA is also required to prepare a strategy each year, in consultation with Court.
In November 2014, the Bank made proposals, subject to legislation, to simplify the structure of its Court and to place all of its policy committees on a similar statutory footing.