Political and public support ‘critical’ for macro-prudential policy, says Kohn

A lack of public support for macro-prudential policy could encourage "political interference", Donald Kohn, an external member of the Bank of England's Financial Policy Committee, has warned.

Speaking at the first annual macro-prudential conference held by the European Central Bank, Kohn acknowledged it was both "difficult" but "necessary" to publically communicate decisions regarding macro-prudential policy.

"We reach out to the press, to the financial sector, to academics, and most importantly we have considerable interaction with the parliament through testimonies and exchanges of letters between the Governor and the Chair of the Treasury Committee," he said, with regard to the FPC.

He noted political and public support are "critical" for effective macro-prudential policy to have its full impact. "The absence of public support invites political interference," Kohn said.