The current governance and accountability framework is set by the 1998 Bank of England Act, which provides for a Court of Directors, a Committee of Non-executive Directors within Court, and a Monetary Policy Committee.

The Court of Directors

The Court is responsible for managing the affairs of the Bank, other than the formulation of monetary policy. Under the 2009 Banking Act, the Bank has a statutory objective to 'contribute to protecting and enhancing the stability of the financial system of the United Kingdom' and the Court, consulting HM Treasury, will determine the Bank's strategy in relation to that objective. Court's responsibilities under the 1998 Act include determining the Bank's objectives and strategy, and ensuring the effective discharge of the Bank's functions and the most efficient use of its resources.

Court consists of the Governor, the two Deputy Governors and 9 Directors. The Directors are all non-executive. The Governors are appointed by the Crown for periods of five years, and the Directors for three years. Last year though some were initially appointed for different durations so as to stagger end dates and help ensure continuity.

The 2009 Banking Act provides for Court to be chaired by a Director designated by the Chancellor of the Exchequer, currently Sir David Lees. Previously Court was chaired by the Governor, although in practice most business has, since 2004, been discussed in meetings of NedCo (see below) under the Chairmanship of the senior Non-executive, with formal decisions taken in Court subsequently.

Members of Court have been indemnified by the Bank against personal civil liability arising out of the carrying out or purported carrying out of their functions, provided they have acted honestly and in good faith and have not acted recklessly. These indemnities were granted in 2000 and approved by HMTreasury in accordance with the practice of the Government in relation to board members of Non-Departmental Public Bodies.

The Monetary Policy Committee (MPC)

The Bank of England Act establishes the MPC as a Committee of the Bank, subject to the oversight of NedCo, and sets a framework for its operations. Under the Act, the Bank's objectives in relation to monetary policy are to maintain price stability and, subject to that, to support the Government's economic policies, including its objectives for growth and employment. At least once a year, the Government specifies the price stability target and its growth and employment objectives. The MPC must meet at least monthly; its members comprise the Governor and Deputy Governors, two of the Bank's Executive Directors and four members appointed by the Chancellor.

The MPC's decisions are announced after each meeting and minutes of their meetings are published two weeks later. The quarterly Inflation Report includes the MPC's projections of inflation and output.

Financial Stability Committee

The 2009 Banking Act created the Financial Stability Committee as a Committee of Court. Its functions are to make recommendations to Court concerning the Bank's Financial Stability strategy; to advise on actions in relation to institutions relevant to the Financial Stability objective; to advise on the use of stabilisation powers in particular cases and to monitor the Bank's use of those powers; to monitor the Bank's use of the payment systemoversight powers; and to carry on other functions delegated to it by Court.

The Committee is to consist of the Governor and Deputy Governors, four Directors appointed by the Chairman of Court who are Sir David Lees, John Stewart, Mark Tucker and Harrison Young, and a non-voting member appointed by the Treasury. The Committee may co-opt other non-voting members.

NedCo

The 1998 Act provides for a Committee of Court (NedCo) consisting of all the Non-executive Directors, with a chairman designated by the Chancellor. NedCo has responsibility for reviewing the Bank's performance in relation to its objectives and strategy, and monitoring the extent to which its financial management objectives are met. NedCo is also responsible for reviewing the procedures of the Monetary Policy Committee (MPC) (see below), for reviewing the Bank's internal controls, and for determining the pay and terms of employment of the Governors, Executive Directors and external MPC members. NedCo is required to make a report as part of the Bank's Annual Report.

Remuneration Committee

The Remuneration Committee advises NedCo on the remuneration of the Bank's most senior executives, including the Governors, Executive Directors (who are not members of Court), the Advisers to the Governors and the members of the Monetary Policy Committee appointed by the Chancellor of the Exchequer (the external MPC members).

The members of the Remuneration Committee are Brendan Barber, Roger Carr, António Horta-Osório and Sir David Lees.

Audit Committee

The functions of the Audit Committee are to assist Court in meeting its responsibilities for an effective systemof financial reporting, internal control and risk management; and receive reports from, and review the work of, the internal and external auditors. The Committee also considers and makes recommendations on the appointment of the external auditors, their independence and their fees. It reviews the annual financial statements prior to their submission to Court, including consideration of the appropriateness of the accounting policies and procedures adopted. The Committee reports its conclusions to Court.

The members of Audit Committee are António Horta-Osório, Susan Rice, John Stewart and Mark Tucker. The Deputy Governors, the Finance Director, the Head of Internal Audit and the external auditors normally attend the meetings of the Committee, and the Chairman of Court may also do so. The Committee normally meets four times a year.

Transactions Committee

The Transactions Committee is consulted about transactions outside the normal course of the Bank's business. Any decisions made by the Committee are reported to Court as soon as is practicable. The meetings in 2008/09 related to the Bank's involvement in the banking crisis.