Bureau Shaping By Central Banks: Explaining Bureaucratic Preferences and Political Autonomy in the Bank of England Since the Financial Crisis

The paper will analyse and explain the changing role and powers of the Bank of England since the financial crisis. It conceptualises the process as a series of nested and sequential games, the resolution of which caused the Bank to shift its bureaucratic preferences to reflect the changing payoffs available from different reform options. The paper shows that during the higher order supervisory game in 2010, the Bank initially tried to resist the imposition of enhanced macro-prudential and micro-level supervisory powers. Having been granted these, however, we argue that it has consistently sought to defend its policy making capabilities from further political or bureaucratic interference. This is illustrated by analysing its preferences and behaviour in two nested bureaucratic games: banking structural reform (2011-12) and bank capital requirements (2012-13). Our argument makes an important contribution to bureau shaping models by showing that central bank officials do not instinctively seek increased powers or budgets as conventional public choice accounts would predict, but rather attach a higher priority to preserving their bureaucratic autonomy and policy discretion.