A Re‐examination of Banking Supervision in the United Kingdom Available to Purchase

Supervision of banks in the UK is conducted by the Bank of England. The Bank which was created by Royal Charter in 1697 was nationalised by the Bank of England Act 1946. This Act gave the Treasury the power to require the Bank to act in the ‘national interest’, however, this power has never been utilised and the Bank has retained a high degree of autonomy from the Government, thus enabling the Bank to apply a laissez‐faire approach to the supervision of banks. Traditionally the Bank has never favoured a heavy‐handed approach to regulation, but has relied upon the use of moral suasion in its capacity as lender of last resort. The Bank's supervisory philosophy has been summed up thus: