Central Bank Independence

9 Nov 2015

Support for multilevel governance seems a prerequisite for any Lib Dem. Devolution from the centre to the periphery, from Westminster to Holyrood and the Welsh Assembly is one example. There has also been devolution upwards to the supranational institutions such as the EU Statesman are no longer the preserve of government; governance is now very much a fixed concept.

However, there has been devolution or delegation to other institutions besides devolved bodies and the EU. The Bank of England's independence is an interesting point in case. If LDV readers do support Central Bank Independence as a theoretical concept in the abstract, then its internal consistency should also have an external consistency when applied to the specific case of the Bank of England.

At this point, I would really like to start a debate on the following:

What should the size and scope of the Bank of England's remit be?

This topic ties into the wider future vision of Europe. As a pro-EU party, the Lib Dems might have to, at some stage post-crisis and post-referendum, have to present a compelling case for entry into the Euro. The twin criteria for this stage occurring means that it is a headache for many years down the line: the Eurozone crisis is unlikely to resolve itself fully for some years yet and the EU referendum is still some way off. The latter, assuming there is an 'In' vote, will mean that Britain will have retaken her vows.

Given that the referendum will be a choice between the Cameron reforms and Brexit, anyone who wanted to vote for the status quo to stay exactly as it is will have to choose between staying and leaving. The status of Britain as a non-Eurozone EU member state might still be preserved with the Cameron deal, but only the current status quo guarantees it - a status quo soon to be obsolete.

Faced with this choice, I hope, as a passionate Europhile, that Britain votes for 'In'. However, it might be worth coming up with a set of possible responses,if not a full-blown homogenous and watertight answer, when asked on the likes of BBC Question Time: "If Britain votes to stay in the EU, would the Lib Dems use this is an endorsement from the British people of eventual admission into the single currency?"

This would of course have implications for our nation's Central Bank and its independence given the changing remit of the European Central Bank since the crisis.

I would really like to know what LDV readers think as the Lib Dems have, if nothing less, a respected and unequivocally pro-EU stance, fiscal responsibility forged in Coalition Government and third, a strong commitment to devolution and autonomy. These three factors should propel the Lib Dems to consider how Central Bank Independence at home might affect future relations between Britain and the EU.

I would really like to hear what my fellow party members think on this issue.

* Michael Cooke is the writer's pen name. He is an economic and EU policy analyst within local government with a Master's degree in EU Governance. The identity of the author is known to the LDV team.

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