The United Kingdom: Threadneedle Street Ascendant

Abstract

At the beginning of the 1970s, the United Kingdom stood out from its counterparts in the OECD. Banking functioned in the absence of any specific statute defining what banking entailed, how it was to be supervised, and under what set of rules it should function. The securities business operated under similarly minimal rules defined in companies and prevention of fraud legislation. Where supervision took place, it came from the Bank of England where the ‘Old Lady of Threadneedle Street’ preferred to use a light, informal touch. Confident in its ability to stay abreast of market developments and of problem firms operating in these markets, the Bank used its considerable reputation and its informal powers to persuade recalcitrants to adopt appropriate behaviour. Historically, the Bank’s effectiveness in this role depended to some extent on the upper class origins and old school ties that united leading figures in the City, as London’s financial district is called, and the Bank.