Sir Mervyn King gets back to basics with Bank’s three Rs

King, who is retiring in June next year, outlined how “regulation, resolution and restructuring” would ensure that the Bank would prevent further crises, insisting that the new regime that has been put in place means it is “up to the task”.

King said in his BBC Today programme lecture that the powers handed to its new financial policy committee will allow it in future to “take away the punch bowl just as the party in the financial system is getting going”.

The governor said that “almost all banks would have failed” without taxpayer support given to banks at the height of the crisis.

He admitted that “bold action in October 2008 could have happened sooner. But the most important thing is that it was done”. But he accepted that the intervention came too late to prevent the loss of 25 million jobs worldwide as a result of the crisis. “I can understand why so many people are angry,” he said.

He blamed a “failure of imagination” in not being able to diagnose the growing risk that led to the near collapse of the global banking system. But he said the Bank had been warning about the build up of risk for “several years”, adding that its power had been limited to “publishing reports and preaching sermons” after its power to regulate banks was removed in 1997.

To read the full speech and to hear extracts, visit the Bank of England website