Bank governor hails financial protections in Cameron's EU deal


David Cameron's renegotiation of the terms of the UK's EU membership provides a number of new protections which will help the Bank of England deliver financial stability, governor Mark Carney has told MPs.

In a letter to the House of Commons Treasury Committee, Mr Carney welcomed assurances in the deal secured in Brussels last month recognising that the interests of non-euro states must be safeguarded as the single currency area integrates. That was an "important commitment", he said.

Provisions allowing central banks of non-euro countries to regulate in a different way from those within the Banking Union deliver "precisely the flexibility the Bank sought ... given its responsibilities to oversee the prudential aspects of the UK's very large and complex financial sector", added Mr Carney.

"Particularly welcome" was a recognition that responsibility for the implementation of regulations on financial institutions and markets and macro-prudential responsibilities will remain with the central banks of non-euro states, he said.

Mr Carney's letter was released as he was grilled by the Committee over the Bank's view on the upcoming referendum on EU membership.

The governor made clear in exchanges with MPs that he did not intend to voice the Bank's support for either side in the June 23 vote.

In the letter, Mr Carney said the Prime Minister's settlement "delivers a number of protections and additional tools that will help safeguard the Bank's ability to continue to achieve its statutory objectives".

It was "welcome" that the settlement reinforced the principle that discrimination on grounds of  currency is not permitted in the EU, he said.

Assurances that non-euro states will not be required to fund bailouts of single currency states "on balance ... enhance the financial stability of the UK".

And commitments to improve EU competitiveness "to the extent that they are fulfilled ... would reinforce the positive impact of EU membership".