16 MAY 1992, Page 23

... money matters

THE BANK badly needs to get BCCI behind it, for it has a job to do. With its name and promise to pay on every ban- knote, the Bank has to believe and needs to say that money matters. Treasury ministers show every sign of indifference to the idea. They have sub-contracted their monetary policy to the European exchange rate mechanism and thence to the Bundesbank. Who needs (so they argue) an independent central bank when we have such a splendid arrangement to do the work for it? So they kept money dear and tight through the depths of the recession, and then wondered why it went on for so long. Now the money supply, on its broader measures, seems to be growing more slowly than any time since records began. That implies that recovery will be slow and late. I hope the Treasury will not be so surprised a second time. As for the Bank, I hope it will consider and assert that money is its business. That is a maxim for a new Governor. Our money will not safely fly on an imported auto-pilot, and still less will it manage itself.