Letter: Unaccountability at the Bank

Sir: It is a pity that in his letter (1 February) Alan Beith fails to mention the most significant difference between the Bank of England and the German Bundesbank. While almost everyone uses the latter to argue for independent central banking, few recognise that the Bank of England is already more centralised, more unaccountable, and more nationalistic than the Bundesbank.

The Bundesbank is made accountable through the federal structure of the German banking system, which links government, banking and business from local through regional to national level. Regional influences are particularly strong, with the board of the Bundesbank having representatives from the regional Lander banks, and the German parliament having a second house composed of delegates from the Lander parliaments.

The Bundesbank is not independent in the way that most UK politicians imply. It could be argued that the Bank of England, whose only real accountability relies on a Governor appointed by the Queen on the advice of the Prime Minister, is in many respects more independent. The 'independent' Bundesbank reflects the concerns of the German people as a whole, and not merely the interests of the unfettered financial institutions of the City of London and its ilk.

Mr Beith's lack of any reference to these matters may have been an oversight, but he and others should take heart that Labour Party policy is moving in this direction. There is a growing realisation that the federalisation of UK political structures, while desirable, would have much greater impact if accompanied by the federalisation of UK banking and financial institutions.

Yours sincerely,

ALEX FALCONER

MEP for Mid Scotland and Fife

(Lab)

Inverkeithing, Fife

1 February