On March 7, 2016, an open letter from Mark Carney, Governor, Bank of England, to Andrew Tyrie, Chairman, Treasury Select Committee, on the effect of UK’s EU membership on the BoE’s statutory objectives was published. The letter was in response to the Committee’s request for comment on the recent settlement agreement between the UK and the EU. The letter summarizes the findings that were made in a BoE report and the possible future impact of the settlement agreement. The BoE’s primary objectives are monetary and financial stability. The three main areas in which the BoE’s objectives are currently effected by EU membership are: (i) it provides dynamism in the UK economy through increased economic and financial openness; (ii) it increases the UK’s exposure to economic and financial shocks from other nations, in particular the EU; and (iii) the BoE is required to implement EU law, regulations and directives in its regulations and policy instruments. Mr. Carney concludes that the settlement agreement provides a number of protections and additional tools that would protect the BoE’s ability to achieve its statutory objectives. Implementation of the settlement agreement, through changes to various EU regulations and directives, is proposed to take place only if the outcome of the UK referendum on EU membership (so called “Brexit”) is a vote to remain. The referendum is scheduled for June 23, 2016.
The letter is available at: http://www.bankofengland.co.uk/publications/Documents/other/treasurycommittee/other/governorletter070316.pdf, the settlement agreement is available at: http://www.consilium.europa.eu/en/meetings/european-council/2016/02/eucoconclusions_pdf and the report is available at: http://www.bankofengland.co.uk/publications/Documents/speeches/2015/euboe211015.pdf.