LONDON (Reuters) - The Treasury holds regular talks with the Bank of England on financial regulation, a government spokesman said on Thursday in response to reports of a rift between the Treasury and the central bank. Chancellor Alistair Darling and BoE Governor Mervyn King have appeared to be at odds recently over how supervision of banks should be split between the Treasury, the BoE and the Financial Services Authority. A government spokesman played down speculation about growing tension between King and Darling.
"There is very close discussion between the government and the chancellor ... about financial regulation matters."
King said on Wednesday he had not been consulted about government financial regulation proposals expected next week and said the BoE should not be held responsible for any breakdown in financial stability as it had no powers to intervene.
Asked whether King would see the proposals before publication, the spokesman said "of course."
He also reiterated that the government was committed to cutting Britain's borrowing levels. King said on Wednesday that the government had not set out credible plans on how it would do so.
"We have set out ... future plans which put the public finances on a path to half the deficit over four years," the spokesman said.
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