The new UK Labour government has won fans in the City of London by announcing, after only a few weeks in office, a wholesale reform of financial regulation.
In general, we support the move to split regulation off from the Bank of England (and to make the central bank independent). But the role of the new regulatory body needs to be carefully thought out. There are some traps it could easily fall into.
The Bank of England has behind it the weight of 300 years of history and all the accumulated prestige that entails.
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