King says not consulted yet on regulation

By Matt Falloon

LONDON (Reuters) - Bank of England Governor Mervyn King said on Wednesday he had not yet been consulted on government financial regulation proposals expected next week, in another sign of tension between the Treasury and central bank.

King also reiterated his warning that the Bank should not be held responsible for any breakdown in the country's financial stability without first being given the power to intervene.

His comments are the latest salvo in an ongoing war of words over how financial stability powers should be split between the Treasury, the Bank and the Financial Services Authority.

"It all depends on your definition of consultation. I have not seen a draft of it, no. No doubt we will have a chance to see it before it appears," King told Parliament's Treasury Committee, which is charged with scrutinising economic policy.

"I've no idea what range of issues the White Paper will cover. I do not know what will be in the White Paper. Whether anybody else does, I don't know."

Chancellor Alistair Darling, who is keen to avoid giving too much power to one part of the tripartite framework, will present proposals for the future of financial regulation next week.

The Treasury declined to comment on King's remarks.

"What matters is that powers and responsibilities are aligned," King said, noting the Bank had a statutory responsibility for financial stability but little power, beyond reports and speeches, to influence events.