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Competition and credit control: some personal reflections

Published online by Cambridge University Press:  07 September 2015

Charles A. E. Goodhart
Charles A. E. Goodhart*
Affiliation:
London School of Economics
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Extract

The Bank of England's ‘consultative document’ on Competition and Credit Control (C&CC) was published on 14 May 1971. It was a landmark occasion, representing a decisive break with the prior system of maintaining direct controls over bank lending to the private sector; the intention was now to achieve the monetary authorities’ objectives of policy via the operation of market mechanisms, notably adjustments in interest rates and open market operations. Although the ‘credit control’ aspect was, over the next few years, notably less successful than the encouragement of competition amongst the banks (where the London clearing banks previously had maintained a restrictive cartel with the support of the authorities), nevertheless the direction of travel towards a more liberal, market-based system, remained, despite a partial reversion towards a direct control system in the guise of the ‘corset’, introduced at the end of 1973, and finally laid to rest in June 1980.

Type
Articles
Information
Financial History Review , Volume 22 , Issue 2 , August 2015 , pp. 235 - 246
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Copyright
Copyright © European Association for Banking and Financial History e.V. 2015 

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References

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