FACTBOX - Govt reforms Bank financial stability powers

LONDON (Reuters) - Chancellor Alistair Darling fleshed out the biggest changes in the Bank of England's powers since the Labour party made it independent just after coming to power in 1997.

The reforms are expected to be finished in Spring 2009, when Bank Deputy Governor for Financial Stability John Gieve is due to step down. He announced he was quitting two years early on Wednesday just as Darling was announcing the reforms.

Below are highlights of the proposed reforms to improve the management of financial stability, following on from lessons learnt after the global credit crunch and near-collapse of high street mortgage lender Northern Rock:

* More responsibility for the central bank. The Bank of England will be given a new, legal responsibility for keeping the financial system on an even keel. Currently, the Bank has a statutory objective only for monetary policy.

* Greater accountability. The Bank's Court of Directors will be slimmed down to 12 from 19 -- a majority of whom must be non-exective -- and be charged with overseeing the central bank's financial stability role.

* Stability-dedicated panel. A Financial Stability Committee (FSC) will be created under the wings of the Court. The Bank's executive will be accountable to the FSC in all financial stability actions, including money market operations and help for specific banks.

* Bigger and better toolbox for policymakers. The plans include changing bank disclosure rules to help improve liquidity operations. Greater powers to intervene under the new special resolution regime to deal with failing banks. Any moves that may affect the public finances will need the green light from the finance minister.

* Closer co-operation with the Financial Services Authority. The Bank will be able to ask the FSA to obtain firm-specific information on its behalf and be able to propose changes to the FSA's prudential regulatory framework.

* In future, the posts of Bank governor, deputy governors or Monetary Policy Committee members will be advertised.