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Competition and Credit Control

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  • C.A.E. Goodhart

Abstract

The Bank of England’s ‘consultative document’ on Competition and Credit Control was published on May 14th, 1971. It was a landmark occasion, representing a decisive break with the prior system of maintaining direct controls over the, main components of the, UK banking system; the intention was now to achieve the monetary authorities’ objectives of policy via the operation of market mechanisms, notably adjustments in interest rates and open market operations. Although the ‘credit control’ aspect was, over the next few years, notably less successful than the encouragement of competition amongst the banks, (where the London Clearing Banks previously had maintained a restrictive cartel with the support of the authorities), nevertheless the direction of travel towards a more liberal, market based system, remained, despite a partial reversion towards a partial direct control system in the guise of the ‘corset’, introduced at the end of 1973, and finally laid to rest in June 1980.

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  • C.A.E. Goodhart, 2014. "Competition and Credit Control," FMG Special Papers sp229, Financial Markets Group.
  • Handle: RePEc:fmg:fmgsps:sp229
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    1. John Joseph Wallis & Richard E. Sylla & Arthur Grinath III, 2004. "Sovereign Debt and Repudiation: The Emerging-Market Debt Crisis in the U.S. States, 1839-1843," NBER Working Papers 10753, National Bureau of Economic Research, Inc.
    2. J. Bradford DeLong, 1998. "Fiscal Policy in the Shadow of the Great Depression," NBER Chapters,in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 67-86 National Bureau of Economic Research, Inc.
    3. Marvin Goodfriend, 2012. "The Elusive Promise of Independent Central Banking," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 30, pages 39-54, November.
    4. Clemens Fuest & Andreas Peichl, 2012. "European Fiscal Union: What Is It? Does It work? And Are There Really 'No Alternatives'?," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(1), pages 03-09, April.
    5. Goodfriend, Marvin, 2011. "Central banking in the credit turmoil: An assessment of Federal Reserve practice," Journal of Monetary Economics, Elsevier, vol. 58(1), pages 1-12, January.
    6. Martin F. Hellwig, 2014. "Financial Stability, Monetary Policy, Banking Supervision, and Central Banking," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2014_09, Max Planck Institute for Research on Collective Goods.
    7. Kevin H. O'Rourke & Alan M. Taylor, 2013. "Cross of Euros," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 167-192, Summer.
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