The Report of the Committee on the Working of the Monetary System (commonly known as The Radcliffe Report) is a report published in 1959 about monetary policy and the workings of the
Bank of England. It is named after its
chairman,
Cyril Radcliffe, 1st Viscount Radcliffe. The report started collecting evidence in 1957 and was the result of dissatisfaction with the workings of
monetary policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often ...
in the 1950s. It still today remains an important reference document on the
Bank of England.
Context of creation
Monetary theory made progress after the interwar years but was disrupted by the war. After the
second world war
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...
, the context was adequate to start rethinking how to run
monetary policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often ...
and this is when the Radcliffe Committee was set up. The committee was composed of Lord Radcliffe, Professor Cairncross, Sir Oliver Franks, Viscount Harcourt, W. E. Jones, Professor Sayers, Sir Reginald Verdon Smith, George Woodcock and Sir John Woods.
Contents
The 339-pages report reviews British
monetary policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often ...
since 1931 to give recommendations. The report downplays the importance of keeping
money supply
In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include Circulation (curren ...
within strict limits as well the importance of
monetary policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often ...
. The report generally was a way to get more control over the Bank of England, suggesting for example to let the
Chancellor of the Exchequer to announce changes in Bank rate instead of the
Bank of England.
Aftermath and impact
The clear impact of the report on
monetary policy
Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money supply, often ...
is debated and its actual influence on policy is limited. Economist
Anna Schwartz, 10 years after the publication of the report, wrote that research in the following years gave "no support to the views expressed in the Radcliffe Report".
One of the main recommendations was that if the commercial banks nor
Trustee Savings Bank introduced a
Giro
Giro or GIRO may refer to:
Banking and Investments
* Giro (banking), a direct payment from one bank account to another instigated by the payer
* Girobank, a state owned and later privatised financial institution in the UK
* GiroBank, a Danish ba ...
system for mass banking, the
General Post Office
The General Post Office (GPO) was the state mail, postal system and telecommunications carrier of the United Kingdom until 1969. Before the Acts of Union 1707, it was the postal system of the Kingdom of England, established by Charles II of En ...
should investigate introducing it. In 1965 when the
new Labour Government published a
white paper
A white paper is a report or guide that informs readers concisely about a complex issue and presents the issuing body's philosophy on the matter. It is meant to help readers understand an issue, solve a problem, or make a decision. A white pape ...
"A Post Office Giro", outlining such a system with a computerised central system for processing transactions. Subsequently
National Girobank was created in 1968.
References
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Monetary economics