Select Committee on Treasury Minutes of Evidence


Examination of Witness (Questions 20 - 39)

WEDNESDAY 25 SEPTEMBER 2002

SIR ANDREW LARGE

  20. If you are privy, as you say, to the interest rate movements coming up and you have some financial control over your holdings, do you not think that you could be open to the charge—the perception, perhaps, but not the reality—that you are in a very privileged position?  (Sir Andrew Large) Clearly that is what I have got to be most careful about, Chairman.

  21. When you say "most careful about", I think what we as a Committee would want to find out is that there is no connection between control of your financial holdings and your position as Deputy Governor.  (Sir Andrew Large) Yes.

  22. Otherwise, even being most careful, that would seem to be unsatisfactory.  (Sir Andrew Large) Yes.

  23. Can you elaborate on that for us?  (Sir Andrew Large) Clearly, I need to satisfy you on it. I need to satisfy you from my own point of view as well as the Bank's, and I will do that. I will do that to the best of my ability.

  24. How do you envisage satisfying us?  (Sir Andrew Large) I think what you would probably like to know is the arrangements that are put in place.

  25. You will keep us informed?  (Sir Andrew Large) I will.

  26. Okay. Has the Government or the Governor of the Bank suggested that an independent evaluator study your financial affairs to ensure that they will not pose a conflict of interest or be seen as posing a conflict of interest?  (Sir Andrew Large) He has not put that point to me but I think the answer to the question is no.

  27. Do you think it would be a good idea, maybe, to go back and discuss it with the Governor?  (Sir Andrew Large) Yes, and perhaps this can go with the earlier question you asked me, to which I have just answered.

  28. If the Governor is involved there, fine. You have been Deputy Chairman and a Director of Barclays Bank since 1998. Do you see any difficulties in operating as the Bank of England's Deputy Governor responsible for financial stability given that until very recently you were a senior director at Barclays?  (Sir Andrew Large) No.

  29. None at all?  (Sir Andrew Large) No.

  30. Do you have any outstanding financial or other interests at Barclays or any of the other companies for which you have worked?  (Sir Andrew Large) I have some shares in Barclays which I accumulated when I was there.

  31. Some would maybe think that could be a difficulty, with shares in Barclays, if you are, simultaneously, holding the position of Deputy Governor of the Bank.  (Sir Andrew Large) I think that, Chairman, really goes back to the earlier part of your discussion, because if that were to be the feeling then the question comes: at what juncture should they be disposed of and how? I think that would need to fall into the arrangements that I need to satisfy you on.

  32. Last question, Sir Andrew, you will be committed to full transparency in this respect with this Committee?  (Sir Andrew Large) Totally.

  Chairman: Thank you.

Mr Plaskitt

  33. Sir Andrew, in the questionnaire that we submitted to you (which you kindly filled in and sent back) we asked you, at question 6,[1] how your performance in the job should be assessed after a five-year period. I was a bit surprised by your answer because it basically says "Well, look at my voting record and I hope to have offered some analysis or points of view". As Deputy Governor of the Bank with responsibility for financial stability, is that the limit of what we should expect from you over five years—some points of view and your voting record?

  (Sir Andrew Large) I took the question to be referring to the MPC and, therefore, I responded on that basis, but maybe I misunderstood it. My response was, if you like, addressing the question of how might my performance at the MPC be judged, and that was why I responded in the way I did.

  34. Let us give you the opportunity to expand a bit on it then. How would you define "financial stability"?

  (Sir Andrew Large) "Financial stability" has a number of elements. One is, obviously, confidence in the financial environment, the banking system and other areas of the financial system. The other is the infrastructure, if you like, within which the financial institutions operate, which includes such areas as clearing and settlement and other areas in which if people are to deal they have to have confidence that it will work. So I think those are, really, the two—trying to boil it down into the simplest analysis—major components, if you like.

  35. Have you any concerns at the moment about either of them in the United Kingdom? Are there any worries you have got about confidence or about the infrastructure?

  (Sir Andrew Large) There are no particular areas at the moment. You need to bear in mind that I am coming to this afresh and, therefore, there is information that I am not fully aware of, perhaps, at the moment. However, if you look at the world economy there are all kinds of issues which are capable of impacting the United Kingdom in one way or another. We obviously have to be mindful of what they all are, but I do not see, at the moment, any particular area where the public needs to feel that confidence should, in any sense, be called into question.<dc0><nb

  36. So you think you are inheriting an area of responsibility where the status quo, at the moment, is fine? It is okay as far as you can see?

  (Sir Andrew Large) I hesitate to say immediately "yes" to that question because you could sound rather arrogant or complacent, if you like, and I do not want to give you that impression. Of course, there are all kinds of areas that one has to look at all the time that could impinge on financial stability: the Stock Market situation, for example; the situation in Japan, and so <dc0><nbon and so forth. There are all kinds of areas which have to be kept under very, very close scrutiny.

  37. Do you have in mind anything you can do over the next five years in your post which will improve and enhance financial stability in the United Kingdom? Any plans or ambitions?

  (Sir Andrew Large) The United Kingdom is part of the world community and things that happen in the world community are going to affect the United Kingdom. One area of work I have been very much involved with and which I want to carry through is to ensure that in the international arena the clearing and settlement arrangements are put together in ways that are much more efficient than they are today and which are systemically more robust than they are today. So that is one area, for example.

  38. You can see some deficiencies in the system and you will want to fix them?

  (Sir Andrew Large) Yes. You asked me about whether there was particular confidence, and that was what I was answering, but of course there are all kinds of areas—difficult areas of public policy, very interesting things that need to be done. Another area which is often talked about is the whole question of accounting standards and the international accounting standard arena. Clearly that is a field that is of great importance, of great interest and in whatever way I or we might be able to make some modest contribution to that discussion I think we would try to do so.

  39. Have you read our modest contribution to that debate?

  (Sir Andrew Large) Which precise contribution?


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