Explain the Legal Framework for the Bank of England's Monetary Policy Essay

Explain the Legal Framework for the Bank of England's Monetary Policy - Essay Example except where clearly quoted and referenced. has been copied from material belonging to any other person e.g. from a book. handout, another student. I am aware that it is a breach of UEL regulations to copy the work of another without clear acknowledgement and that attempting to do so renders me liable to disciplinary proceedings. SECTION B: (to be completed by the tutor marking assignment) Assessment Criteria: Weightings Criteria based Feedback Mark Achieved Logical Sequence and Development 10% Evidence of Background Reading 20% Appropriate Depth of Analysis 30% Critical Evaluation of Issues/Results 25% Referencing Technique 5% Presentation including Language and Grammar 10% TOTAL MARKS 100% Good practice demonstrated: Aspect to consider for improvement: Tutor's Name: Date Received: PROVISIONAL MARK Explain the legal framework for the Bank of England’s Monetary Policy and discuss the effectiveness of central bank independence in times of financial crises. Module Code:FE3011 Mo dule Title: Monetary Economics Student Number:0843375 Table of contents 1. Introduction 3 2. Bank of England – monetary policy 3 2.1 Overview of Bank of England’s monetary policy 3 2.1.1 Monetary policy, elements and effects 3 2.1.2 Monetary policy of Bank of England 4 2.2 Legal framework for the Bank of England’s Monetary Policy 5 2.3 Effectiveness of central bank independence in times of financial crises 7 3. Conclusion 8 References 9 Appendix 10 1. Introduction In most countries, the standardization of the economy is considered as a challenging task, even when the level of national resources, as combined with commercial activities, is characterized as quite satisfactory. The development of an effective monetary policy can help a country to secure its position in the international community; at the same time, a successful monetary policy can help a country to keep the control on its industries and resources, ensuring the availability of capital required for th e completion of local government’s plans. This paper focuses on the examination of the legal framework for the Bank of England’s monetary policy; furthermore, the effectiveness of the Bank’s independence in times of financial crises is discussed referring to the literature and the empirical evidence developed in the specific field. It is proved that, in the UK, the monetary policy is influenced by a series of factors; for this reason, the legal framework for the Bank of England’s monetary policy is not standardized. In its current form, the legal framework for the Bank’s monetary policy is quite flexible, incorporating rules for regulating all aspects, as possible, of the national economy. In the future, particular emphasis should be given on the valuable role of Bank of England in securing payments across the country, regulating the monetary policy of the country and controlling the activities of bank institutions (HM Treasury 2008, p.86). 2. Bank of England – monetary policy 2.1 Overview of Bank of England’s monetary policy 2.1.1 Monetary policy, elements and effects In order to understand the characteristics and the effectiveness of Bank of England’s monetary policy, it would be necessary to refer primarily to the elements of monetary policy, as part of a country’s economic life. According to Ruddock (2008), the monetary policy of each country is set and monitored by the country’