For the Bank of England, today was at least partly about showing that it is transparent and straightforward. After all, it has taken on new far-reaching powers which make it the most important public sector body outside Westminster. It has come under fire for introducing not one but two new monetary policy systems in six months. And it has, lately, come under scrutiny for its oversight of the foreign exchange market, amid allegations of rigging.
All of which is why today was all about presenting a new, more open face. How did it go? Not very well.
It started inauspiciously. Not long after Mark Carney arrived, it emerged that despite minutes suggesting there was little discord on economic policy, there were significant gulfs of opinion between the Governor and other members of the Monetary Policy Committee. The obvious conclusion: that the minutes don’t tell the full story.
A few moments later, Paul Fisher, the executive director for markets, revealed that the Bank routinely destroys its recordings of MPC meetings – a stark contrast with US counterpart the Federal Reserve, which publishes full transcripts of meetings after five years. Which means that those less-than-comprehensive minutes are the only historical record for perhaps the most momentous monetary policy decisions (think 315-year low interest rates, £375bn of quantitative easing) in history.
There were audible gasps in the room; one of the MPs muttered “shades of Nixon”, referring to the former US President’s alleged attempts to destroy secret recordings of his meetings during the Watergate scandal.
So there was an air of scepticism in the room even before the Treasury Committee got to the real talking-point of the day: the Bank’s knowledge, or otherwise, of alleged dubious deals in the foreign exchange markets, and its failure to act. Fisher and Carney insisted, time and time again, that although questions had been raised over irregularities in the forex markets all the way back in 2006, they hadn’t been told about actual abuse allegations until October. Their explanation may well have been reasonable, but it was so long-winded and abstruse few of the MPs seemed able to grasp it (and this latest vintage of TSC members is unusually intelligent).
The Bank’s solution, such as it is, is to introduce yet another layer of management at Threadneedle Street. There will be a new markets/banking tsar, who will have deputy-governor style powers although not, it would appear, the title, as that would involve another Act of Parliament. There will be a range of inquiries, not to mention a strategic plan over the Bank’s structure, which will be unveiled next week.
And to some extent that is entirely understandable. The new Governor has hardly had much time to get his feet under the table. His own personal reforms of the Bank (as opposed to those instituted by George Osborne and Mervyn King in previous years) will take time. And there’s nothing all that new about the Bank being secretive and tricky with MPs. Back in the days when Montagu Norman was Governor, it was tricky to get any words out of him at all at Parliamentary hearings.
The problem is that this is an entirely different world to the 1930s. The Bank officials may not like it, but wilful opaqueness is not compatible with the democratic system which appoints and employs them. The fact that the Bank routinely destroys MPC recordings is surely unacceptable – particularly since the minutes the Bank often wilfully overlook any disagreements between the committee members.
And the less people trust the Bank, the less likely they are to believe their explanations when it is in the vicinity of wrongdoing. Secrecy and intentional complexity can occasionally be construed as guilty behaviour – even when it may have done nothing wrong. It’s something worth dwelling on, given many expect the foreign exchange scandal to become even bigger and even more scandalous than the Libor one that preceded it.read more
Curious about specifically what kinds of trade sanctions (as opposed to financial sanctions, which I covered in more depth here) might cause most harm to Russia? In other words, what does Russia most rely on from overseas, whether in terms of imports sucked into the country, and exports sent out. Here are some clues.
First, here’s what Russia exports. In each of these charts, by the way, you can see more detail if you hover your mouse over the graphic itself. Notice anything particularly glaringly dominant?
And below is where the exports go. In short: oil/gas, and Netherlands/Germany/China are by far and away the most important nodes in Russia’s trade relationship (goods trade, that is) with the rest of the world.
the main products the country imports. Here, the main import is cars, but note that the picture is far less dominated by one specific product than with its exports, which are primarily fossil-fuel-related.
And here is where those imports come from:
You might find the charts above of particular use when contemplating why particular countries are so reluctant (or indeed so open) to impose sanctions on Russia. The graphics are from this brilliant MIT project. Well worth perusing when you have an idle moment.read more
Businesses involved in handling cash and transactions in the UK are obliged to report suspicious activity to the National Crime Agency. Given how much supposedly dirty Russian money is allegedly flowing around the London property market, one might have expected estate agents to make up a large proportion of these so-called Suspicious Activity Reports (SARs). In fact, it turns out that estate agents accounted, last year, for the lowest proportion of SARs in the country.
Just came across this fantastic dataset from the OECD [xls] showing how people in different countries, and of different genders spend their time. I have no idea how reliable the data are, but there are a few interesting nuggets in there. Among them that the average South African spends more than nine hours asleep each night. The lightest sleepers are the Norwegians, at less than seven hours. Britons get just over eight hours.
Another series shows how much time we spend eating. Here, perhaps unsurprisingly, it’s the French who come out top, spending well over two hours each day eating. Britons come out lowest, spending less than an hour each day eating.
I’m sure there are plenty of other great insights in there too. Though I’ve no idea how reliable the dataset is…read more