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Tuesday, October 26, 2010

Mervyn King Quote: “Banking” and “Crises” are natural bedfellows

by Calculated Risk on 10/26/2010 08:40:00 AM

A quick quote from Bank of England's Mervyn King: “Banking: From Bagehot to Basel, and Back Again”

The words “banking” and “crises” are natural bedfellows. If love and marriage go together like a horse and carriage, then banking and crisis go together like Oxford and the Isis, intertwined for as long as anyone can remember.
From the press release:
[T]he Governor of the Bank of England, Mervyn King, outlines the challenges of managing the financial system and suggests a framework for assessing proposals designed to reduce the riskiness inherent in banking and solve the “Too Important to Fail” problem.
He discusses several options including the imposition of a permanent tax on banks, higher capital requirements and limits on leverage.
“Change is, I believe, inevitable. The question is only whether we can think our way through to a better outcome before the next generation is damaged by a future and bigger crisis. This crisis has already left a legacy of debt to the next generation. We must not leave them the legacy of a fragile banking system too.”