Andrew Tyrie asks Mark Carney to clarify Bank of England monetary policy committee conflict of interest rules
The chairman of an influential parliamentary committee has asked Bank of England governor Mark Carney to reconsider rules surrounding membership of the Bank’s monetary policy committee (MPC).
Andrew Tyrie, who chairs the Treasury Select Committee, wrote to Carney today about the appointment of Gertjan Vlieghe, a senior economist at the hedge fund Brevan Howard, to the MPC.
Tyrie wrote: “The appointment of Gertjan Vlieghe to the Monetary Policy Committee (MPC), and the subsequent need to remove any perception of a conflict of interest between that role and his stake in Brevan Howard, suggests that the Code of Conduct for MPC members would benefit from re-examination.”
Vlieghe is set to take up his role on the rate-setting committee next week, on 1 September.
When Carney announced Vlieghe’s appointment in July, Vlieghe had intended to stay part of a long-term incentive plan at Brevan Howard, where he was a partner. The arrangement would have provided him with payments based on how much money was managed by the fund, whose traders make bets on the impact of central bank decisions.
At the time, the Treasury said Vlieghe’s stake in Brevan Howard did not pose a conflict of interest.
But after critics – including Tyrie – raised a red flag, Vlieghe apparently changed his mind, saying earlier this month that he had reached an agreement to be bought out from his stake.
In a statement on 1 August, Vlieghe said: "As of 31 August I will have severed all financial and other ties with Brevan Howard. I have taken this step to avoid any mistaken impression of a conflict of interest.”
In his letter to Carney yesterday, Tyrie said: “It is essential that those appointed to the MPC have no conflicts of interest, nor perception of them.”
He added: “A well designed Code of Conduct, sensibly applied, should be capable of achieving this without diminishing the quality of applicants.”
A Bank of England spokesperson confirmed today that Carney received Tyrie’s letter, adding that the Bank would reply “in due course.”