MERVYN KING, governor of the Bank of England, gave his full backing yesterday to government plans to shake up financial regulation, telling MPs that the changes “add up to a sensible package of responsibilities”.
Although the bank would in future have the power to regulate individual banks, set regulatory conditions for the whole financial system and continue to control interest rates, Mr King rejected accusations that he was empire-building.
But recognising that the institution of the bank “will indeed be powerful”, he said it was vital its accountability was strengthened. “What I mean by accountability is accountability to parliament, to the government and to the public.
“I would differentiate that from accountability to the industry itself, which is often an excuse for ‘we’re meant to give in to lobbying’,” Mr King added.
Mr King said he had “reluctantly” changed his mind on regulatory structures as the financial crisis wore on because the bank was forced to become heavily involved in the minutiae of all British banks.
“If we were going to have to play such a deep role in a crisis period, it actually would have been sensible for us to be closer to the system of regulation in peacetime and we weren’t,” he said.
Giving his detailed views on the structure of regulation for the first time in public, Mr King admitted that the bank would not have prevented a financial crisis in 2008 had he and his team been in charge.
“I don’t think we would have been able to have prevented a crisis because I think it was global in nature,” he said. Mr King was, however, more hopeful that the proposed financial policy committee could have made some difference. – (Copyright The Financial Times Limited 2010)
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)