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Bank committee must be independent: report

By Sam Lister

A Bank of England committee must become more independent to ensure it acts as an "early warning alarm" for potential financial problems, a report out today recommends.

The Financial Policy Committee (FPC), set up to monitor overall risks in the UK system, is appointed by Chancellor George Osborne.

Think-tank Policy Exchange has called for most FPC members to be externally appointed with a background in financial markets to avoid "group think".

In a paper, Financial Policy, Monetary Policy and Macroprudential Regulation, it also recommends the Treasury's representative is removed from the post and that Parliament's Treasury select committee has the power to veto any appointments to ensure the FPC's independence.

The interim FPC held its first meeting in June and the committee will make recommendations to the Treasury on which directive powers it should have early next year.

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