Strategic Monetary Investment Bill 2016

An Act to permit the Bank of England’s Asset Purchase Facility to buy bonds issued by agencies with a specific remit for productive investment within the UK and to create a Monetary Allocation Committee to govern asset purchases.

BE IT ENACTED by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

Section 1: Definitions

1. The APF or Asset Purchase Facility shall refer to the Bank of England Asset Purchase Facility Fund Limited, a publicly-owned subsidiary company of the Bank of England.
2. The MPC or Monetary Policy Committee shall refer to the Monetary Policy Committee of the Bank of England.

Section 2: Establishment of the independent Monetary Allocation Committee

1. An independent Monetary Allocation Committee (MAC) of the Bank of England shall be established and shall meet at least once a month.
2. The voting membership of the MAC shall be as follows: (a) The Chair, appointed by the Governor of the Bank of England upon the consent of the Treasury. (b) Three members appointed internally with their titular roles divided to ensure they fully oversee all potential consequences of monetary allocations. These titular roles shall be permitted to differ based on the membership and individual areas of expertise of the membership. (c) The Chief Economist of the Asset Purchase Facility. (d) Four external members appointed by the Chancellor of the Exchequer for renewable three-year terms, to be chosen for academic, private sector and/or civil society experience and breadth of opinion in matters relating to the policies to be undertaken by the MAC.
3. Each voting member shall have an equal vote.
4. One nominated representative each from the Monetary Policy Committee (MPC) and the Treasury shall be permitted to attend each meeting as observers and may offer contributions but shall not be permitted to vote.
5. A nominated representative of the Monetary Allocation Committee (in addition to the existing representative from the Treasury) shall be permitted to attend each meeting of the MPC as an observer, and may offer contributions but shall not be permitted to vote.

Section 3: Division of roles and mandates between MAC and MPC

1. The mandate of the MPC shall remain to promote price stability, and subject to that, to support the Government’s economic policy objectives.
2. The MPC shall decide on the quantity and maturity terms of central bank reserves loaned to the APF as part of monetary policy.
3. The MPC shall take the impact of MAC asset purchases into consideration (alongside all other macroeconomic data) in reviewing monetary policy at monthly meetings.
4. The mandate of the MAC shall be to support the Government’s economic policy objectives, subject to the proviso that its actions should not undermine price stability.
5. The MAC shall decide upon the type of assets to be purchased by the APF to best meet economic policy goals.
6. The MAC shall be obligated to manage the portfolio of assets such that it maintains sufficient liquidity to respond to conceivable MPC monetary policy decisions.

Section 3: Asset Purchases

1. The APF, under the direction of the MAC, shall be explicitly permitted to purchase bonds with a specific remit for productive investment within the UK in addition to gilts.
2. In purchasing such bonds, the APF shall not be permitted to explicitly choose certain projects or companies over others, and shall be restricted to operating exclusively through state-owned intermediaries which are permitted to issue bonds with a remit for productive investment.

[Explanatory note for lawmakers: examples of such intermediaries include the Green Investment Bank, the Green Deal Finance Company, the proposed Royal Bank of Sustainability, and the proposed British Investment Bank]

Section 4: Enactment, extent and short title 1. This bill shall come into effect three months after receiving Royal Assent. 1. This bill shall extend to the United Kingdom of Great Britain and Northern Ireland 1. This bill may be cited as the Strategic Monetary Investment Act 2016.

Submitted by /u/colossalteuthid, the Chancellor of the Exchequer, on behalf of the 11th Government.

Amendments should be sent to /u/thatthinginthecorner by 06:00 GMT on 5 December 2016.

Amendments should clearly indicate what is being amended (add, change or remove) and in Reddit format. Amendments not in this form will not be accepted.