Former central banker Paul Tucker is the chair of the Systemic Risk Council, a Fellow at the Harvard Kennedy School, and author of Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State. 

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Sir George Blunden Memorial Service Eulogy

In a very short time we – the Bank of England community – have lost three of our great post-War figures.  First, Eddie George, then Gordon Richardson, and now George Blunden.

George joined in 1947 and retired in 1990 (for the second time). He served under six Governors: from Catto to Leigh-Pemberton.

His career spanned decades in which, especially initially, the Bank was largely on the margins of macroeconomic policymaking.  Rather, the Bank was responsible for policy’s implementation, expert in the ways of the market.

But it was also a period in which the Bank’s stewardship of the financial system was redefined, and during which the Bank’s own internal structure was transformed, clearing the way for much that followed.  In both, George Blunden was one of the central figures.

He made a promising start. An early report: “Appears to be ambitious and should do well in the Bank.  Above average intelligence.  Undismayed by the pressure of work”.

Handwriting was a concern – a test he later abolished (thank goodness).

After a decade, which had included a secondment to the IMF, he found his way to the Discount Office, the centre of the Bank in those days. It would have been there that he learnt to handle the market; as one obituarist put it, “to be critical without giving offence”.

Rather than succeeding Hilton Clarke to the great position of Principal, he was seconded to the Monopolies Commission to help develop a strategy for mergers amongst the clearing banks. He mentioned this sufficiently often that I know it was an important experience for him. He had thought about banking from different angles.

George returned to the Discount Office during the Secondary Banking Crisis in the mid-70s, supporting Jasper Hollom in manning the Lifeboat.

During that period he was asked by Governor Richardson to establish the Bank’s first proper banking supervision team.   This became one of the central elements of his career.

It didn’t stop in the UK. Disaster had struck elsewhere – in the shape of Herstatt Bank’s collapse in 1974. Recognising that the international banking system was joined up, the Governors of the G10 central banks established the Basel Supervisors Committee and asked George to be its first chairman. The Blunden Committee, as it was initially known before it became the Cooke Committee, set down the basis for co-operation between supervisors: home county responsibility. With one or two updates, the Concordat lasts to this day. It is one of the foundation stones of our international financial system, and one of the very first global standards.

Less well remembered is that, a few years later, George was asked to be the first Chair of the Basel Group of Experts on Payment Systems.  That committee also still thrives.

George was, in short, one of the founding fathers of financial system supervision.

Internally his mark was as strong. He had three spells running the Bank at various levels. He was a tough cutter of cost, and slimmed down the Bank.  But one thing stands out.

Since time immemorial most of the Bank had been run day-to-day by the Chief Cashier. The handful of directors called ‘executive’ were, in fact, mainly advisers to the Governor. George wanted all that changed. Forest Capie’s History tells the story well. Starting in 1978, George managed to set an agenda which Governor Richardson embraced.  In 1980, executive directors were made executive. The policy areas of the Bank were strengthened. The Bank’s workings were transformed. The improvements made under Eddie and Mervyn would not have been possible without this huge change.  History was overturned.

George retired, in 1984 – for the first time.

But the Bank wobbled, after the failure of Johnson Matthey Bankers. George was bought back as Deputy. “I can do anything now”, he said, “I have been brought back from the dead”.

He and Governor Leigh-Pemberton were a remarkable partnership. Mainly eye to eye, and complementary. As Lord Kingsdown himself summed it up recently: “We were able to turn to him with confidence to deal with any situation that arose. We knew that if he approved, it was likely to be the right answer.”

It was the greatest privilege to serve them.

George steadied relations with the Treasury. For most of this time, Peter Middleton was the Permanent Secretary. Governor Leigh-Pemberton summed up their relationship at one of George’s retirement parties:

“There would be a problem. George and Peter would lunch, at the Reform. George would return with reassurance: ‘All is fixed, I have Peter round my little finger.’ Meanwhile, Peter would return to the Treasury: ‘All is alright Chancellor. I have George around my little finger.’

Almost invariably it was fixed.  Not a bad way to handle things.

And, of course, George helped underpin confidence in the Bank’s grasp of banking affairs. He was never lost in the detail.

But he could be very tough.   After the top management of one prominent firm had been changed, he commented “It was an unpleasant thing we had to do, but I have no doubt that it was right”.

This isn’t just history. What he did during that period has had a strong resonance today when the Bank is again being reformed.  This is a quote I have often used over the past few years:

“A bank may consider a course of action it wishes to take to be acceptable – as it may well be in a limited context. But the same course might, if widely copied by other banks, have unfortunate effects on the banking system as a whole. It is part of the supervisors’ job to take that wider, systemic view and sometimes to curb practices which even prudent banks might, if left to themselves, regard as safe.”

George said that 25 years ago.  But its focus on the system is the central, animating thought behind the creation of the Bank’s new Financial Policy Committee. An old approach in modern institutional clothes.

Other parts of the current reforms of the Bank also bear George’s mark. The prudential arm will be put in a subsidiary.  That is an idea that George discussed with Governor

Leigh-Pemberton in the late 80s, and with Governor Richardson in the late 1970s. Now it is happening.

George would have welcomed the debate about the accountability of the Bank. As he said more than once “No central bank can be unaccountable”.

But what was he like?

He was tough, stern at times. “Called a spade a spade”, as one old colleague put it. A short fuse occasionally – perhaps more in his first incarnation than the second.

He teased the staff. More than one of them has said that this was probably largely designed to make generations of us think.

He could also tease to stir up trouble.    Mike Foot recalls Deputy Governor Blunden at a lunch with the IMF and the World Bank in Washington “Why do you both need to exist?” was his opening question. He then sat back and watched as his hosts tore each other to pieces.

He played odd games. It was the old Discount Office man who indulged in one of his more extraordinary traditions. Many of you here will know about the old Thursday afternoon tea party when the Chairman and Deputy Chairman of the Houses called on the Governor. As Deputy Principal, George must have been part of this pantomime from time to time:

  • Chairman and Deputy Chairman taken into Waiting Room by pink-coated Steward
  • Principal asks what they are going to say to Governor
  • Principal pops into the Governor to tell him what the Chairman plans to say; and, note, to suggest, just suggest, how the Governor might
  • Chairman and Deputy Chairman enter, and all perform said

Anyway, while all that was going on, every week George would pop out of his office and put a penny in each of the Top Hats resting on the bench outside the Governor’s Room.

Was this liquidity assistance?     More likely it was some kind of ritual humiliation – could the Chairman remember from one week to the next what would happen when he put his hat on!

I’ve said he could be fierce – but sometimes in ways that produced great comedy.

All the Governors around the Commonwealth and beyond were in the Bank for the annual gathering.  There was an absolute Noise Embargo.  It was broken – badly.

A stern message – in truth an escalating torrent of messages and orders – came forth from the meeting – from the Deputy – eventually to the GPS, me – to get it stopped.  Stop it!  French

farce ensued: Pink Coated Stewards eventually had to wrestle a builder to the ground in a subvault. But the best of it was that I was told to get hold of the Head of Premises and “send him home.  Tell him not to come back for a week”.  So, dutifully, I summoned Gerry Everett

– a man rather senior to me – and delivered the message. “The Deputy says you are a disgrace.  You are to go home” etc etc.  Gerry’s reply – “Oh no, not again”!

Sending people home is no longer one of our policy instruments. I think it was unique to George even then.

He would look for help in moments of need. When the great storm occurred in 1987, he was found wandering around asking whether any of us knew how to call a Bank Holiday. I’m afraid we didn’t.

A day or so later, he led the Directors in First Floor Committee Room meetings that went on for days about what to do to contain the aftermath of the Black Monday crash. We could see them all.  It was amazing.

Later I realised that during this period he had been in constant touch with Jerry Corrigan at the NYFed.  An internationalist central banker.

During his reincarnation as Deputy, we discovered that he was kind and considerate under the mask of severity.

He was the most extraordinary talent spotter I have seen in the Bank. It seemed to be how he spent his time. It was one way his influence outlasted his tenure.

He thought about how we appeared to the general public. He picked up Kit McMahon’s idea for expanding the Bank museum and made it happen, overcoming persistent opposition. He and Governor Leigh-Pemberton wanted the public to step foot in the building. George was proud of the museum which opened in 1988.   It is fitting that we go there later this evening.

In his last months at the Bank, he started pretending to be much older than he was. One day he shuffled silently into my office – “No decent Governor’s Secretary would be dressed like that”. Disappears.  Reappears.                                                     “A decent Governor’s Secretary would be wearing a tailcoat!”   “Yes, Mr Deputy”.

On another occasion, I had to go into see him. Standing in front of his desk (we stood for Deputies in those days) – and I remember this word for word:                             “Sorry to bother you Mr Deputy, I’m afraid the Governor needs some advice”.                                                         “I’m senile, no point talking to me”. “I’m very sorry to hear that Mr Deputy. If I may, I’ll just say what’s on the Governor’s mind, and you just say whatever comes into your head”.

And on we went.   I loved working for him.

I have made George and his career sound tangential to monetary policy. Not a bit of it. Bill Keegan immortalised George in his weekly macro column. He thought deeply about the political economy of central banking, and his final speech as Deputy in February 1990 was about the conditions necessary for monetary independence to work. This is how he concluded:

“My ideal is a publicly responsible central bank entrusted with effectively maintaining the stability of the currency but in a society where such stability is generally desired, where inflation is widely recognised as a deadly sin, and where government is dedicated to price stability.”

Over his nearly 45 years, he had seen the roles of the Bank ebb and flow, and our reputation wax and wane. He knew that our role in policy and operations, in monetary and financial stability, depends on public consent and support.

It was a fitting and wise note on which to retire.

George was stern, tough, mischievous, supportive, expert, a safe pair of hands, committed to the role the central bank can play in our society – but most of all he was wise.

A moderniser, who presented radical reform as natural progression.

Great parties were given for his second retirement. One for the staff. One for the grown ups. All the good and great came – from central banking, Cabinet, Whitehall and Westminster, the market, and the media.

The next day, his last, I just happened to look up as he passed my room, leaving the Bank for the final time – accompanied I think by Lady Blunden.  I could swear he was quietly crying.

George Blunden loved the Bank of England. His mark on the Bank is indelible. We treasure his memory.