The Bank of England and Financial Services Bill is currently making its way through the upper house. On Tuesday, its second reading was introduced by Cabinet Office minister Lord Bridges.

The bill makes various changes to the Bank’s transparency and governance arrangements. Most significantly, it aims to integrate the Bank’s monetary policy and macroprudential functions through the creation of a new Prudential Regulation Committee.

The minister explained that the bill forms part of the government’s commitment to a “new settlement for financial services”, which aims to deliver stability and protect taxpayers, while allowing free markets, enterprise and innovation to flourish.

But in leaving many of the fundamental structural problems with our economy unchanged, the bill fails on the government’s own tests.

Stability is undermined by a monetary and fiscal policy which creates dangerously high levels of household debt.

Our banking sector is prevented from operating as a truly free market because banks are in the highly privileged position of being able to create money; a process which is underwritten by the taxpayer.

Enterprise and innovation is poorly served by a banking system which directs credit primarily towards property bubbles and financial speculation rather than investment the real economy.

The bill has already launched a debate on how the Bank’s monetary policy decisions should me made more publicly accountable, and how the Bank of England’s governance arrangements need to reflect today’s economic challenges.

For our own part, Positive Money will be using the bill to make the case for a money commission to investigate why the UK’s monetary system is failing to serve the public interest, and to consider the options for more fundamental reform.