Bank insider gets out and about to talk to businesses
Elisabeth Stheeman, a Member of the Bank of England’s Financial Policy Committee, on the committee’s role and her recent visit to south Wales
As an external member of the Financial Policy Committee (FPC) of the Bank of England, I had the pleasure of visiting Cardiff last Friday.
I spoke to over 100 businesspeople and dozens of sixth-form students of a Welsh-speaking school.
While I am based in London most of the time, the Bank is keen to have a well-rounded view of economic conditions and prospects from across the country. We achieve this primarily through our national network of 12 agencies which act as the Bank’s eyes and ears, gathering market intelligence, speaking first-hand to companies about what is going on with their business, and explaining the Bank’s thinking on various issues.
I have recently joined the FPC and my fellow members and I try to get out of London as much as possible. In fact, all FPC members will head up and down the UK over the course of each year.
So what exactly does this committee do? It was established over five years ago following the financial crisis – its purpose is to look at what the areas of risk are both here in the UK and abroad and how they might threaten the stability of our financial system. At the time of the financial crisis, we saw how one financial institution can threaten other firms through a domino effect.
While one domino standing on its own might be strong, if knocked by another one it can cause a longer chain event and have severe consequences. This was what we saw during the crash and our committee looks to make sure all the dominoes keep standing strong.
One of the ways that we identify these risks is speaking directly to the people who deal with them on the ground day to day – businesses. It was very interesting and helpful to hear what some of them raised during my meetings in Cardiff.
I was questioned on a variety of topics from property markets, cyber risk and consumer credit to whether banks are capitalised enough and what cryptoassets might mean for the economy of the future. I was also asked about the financial stability risks stemming from the UK’s pending departure from the European Union. These are all things that the FPC is looking at closely and it was incredibly insightful to hear the views of the financial and professional services sector representatives I met.
Communication is very much a two-way process – it was fantastic to head to Ysgol Gyfun Bro Morgannwg, a Welsh-speaking school in Barry, and explain what the Bank does and why economics and finance matter in our daily lives. There were some tough questions from the students, particularly on whether the Bank does enough to explain what it does and whether schools do enough to teach students about how to deal with money.
I enjoyed being able to share some of the insights from my 35 years’ experience of working in financial services, real estate and the public sector. I hope some will end up having stellar careers in finance, and maybe even at the Bank of England itself.
Getting out of London, speaking to businesses, being in listening mode and engaging with the workforce of tomorrow provides me with a broad variety of views which are essential for my role. This will help the Bank ensure that the financial system continues to provide a service to households and businesses here in Wales and across the rest of the UK, both in good times and bad. I am looking forward to my next visit.