Following the ‘new settlement for the United Kingdom within the European Union’ reached by the government on 19 February 2016, the House of Commons Treasury Committee requested the Bank of England’s (BoE) views.

In response, Mark Carney, BoE Governor, published a letter to the House of Commons Treasury Committee Chairman summarising the BoE’s assessment of how EU membership affects its ability to achieve its statutory objectives. These objectives are contained in an ‘October 2015 report: EU membership and the Bank of England’.

Amongst other things, the letter sets out that the new settlement:

  • Addresses important issues to maintaining the BoE’s ability to achieve its objectives (given the likely need for further integration of the euro).
  • Recognises the UK’s need to supervise its financial stability.
  • Makes clear that the UK retains responsibility for supervising its financial stability, financial institutions and markets, as well as maintaining responsibility for resolution of failed institutions.
  • Recognises that EU financial services legislation may need to differentiate banking union member states and non-participating member states like the UK.

In the annex to the letter, it also sets out its views on the effective subsidiarity mechanism and the overall cost of EU regulation.