The Treasury should stop playing silly games

15th February 2025

Richard Murphy once again yesterday on his blog exposed that farce of the independent Bank of England promoted by the UK government.

HM Treasury and the Bank of England issued a Memorandum of Understanding between them yesterday. This relates to the supposed independent funding of the Bank and how that arrangement will be managed.

Let me be candid about this document. It is a complete joke. The Bank of England is entirely owned and controlled by HM Treasury.

The Bank's job is to act as banker to the government, working under the direction and control of parliament through the Treasury. What it might do is very strongly controlled by statute.

As a regulator, the Bank is just another government agency.

As a purchaser of the government‘s own debt, of which it still owns more than £650 billion worth, the Bank of England is complicit in the pretence that is called quantitative easing. This arrangement pretends that the Bank independently buys government bonds in financial markets when everyone knows that the government was simultaneously issuing similar amounts of debt into those markets, meaning that, in effect, the Bank was directly funding the government as a result of a direction from the government that it should do so. To pretend in that case there needs to be an understanding between the parties is farcical.

If the government chose to say jump to the Bank of England, then it would jump.

Read the full blog item HERE and get a clear picture of the true standing of the BofE