We should not pretend banking system is safe, says former Bank of England governor Larry Elliott: The global economy needs to change fastThe world is sleepwalking towards a fresh economic and financial crisis that will have devastating consequences for…Read more
Mervyn King’s IMF speech turned heads – dangerously little has changed since the 2008 financial crisisThe world economy is sleepwalking into another crisis, says Mervyn KingThey were all there. Mario Draghi, in his last few weeks as president of the Eu…Read more
While his predecessor and proponents of no-deal vanish into fantasy, the governor is clear about the dangers we faceWhen my old friend Mervyn King completed his 10-year term as governor of the Bank of England in June 2013, I was deputed, as one of the …Read more
Mervyn King says Britain could ease ‘dislocation costs’ with six months of planningThe former governor of the Bank of England, Mervyn King, has attacked MPs over their handling of Brexit and called for Britain to leave the EU without a deal after six m…Read more
King’s attack on Theresa May’s Brexit did not give us an estimate of the economic damageSome would say governors of the Bank of England should slip quietly into the shadows after leaving office, but at least Mervyn King offers value for money when he s…Read more
Ex-Bank of England governor hits out at No 10, Treasury and his successor Mark CarneyMervyn King, the former governor of the Bank of England, has launched a stinging attack on Theresa May’s Brexit deal, likening it to the appeasement of the Nazis in th…Read more
Ten years ago this weekend the investment bank’s bankruptcy caused panic in US and UKTen years ago this weekend Lehman Brothers crashed into bankruptcy – the biggest corporate failure in history – and sent the world’s financial system reeling close to …Read more
Former Bank of England governor says it ‘beggars belief’ the government is having to talk about stockpiling medicines and foodThe former Bank of England governor Mervyn King has blasted the government over Brexit, saying it has been left without a cred…Read more
Key players in the drama recall the day that sparked the first UK bank run in 140 years and heralded a global financial crisis
The ninth of August 2007 was the first day of Mervyn King’s holiday. The governor of the Bank of England spent it at Lord’s cricket ground where he was interviewed by the former England cricket captain Michael Atherton. While Lord King was watching the cricket, the French bank BNP Paribas announced it was freezing the assets of hedge funds that were heavily exposed to the US sub-prime mortgage market.
It was the first and last day of King’s holiday. He would not have another for several years. Within six weeks, members of the Bank’s court – its oversight body – were being whisked into the back entrance of Threadneedle Street in a people carrier with blacked-out windows to be told that money was haemorrhaging out of Northern Rock.Read more
Two decades after Gordon Brown allowed the Bank to set interest rates, it must answer new questions about its role and responsibilities
It is 20 years since the Bank of England was given the right to set interest rates by Gordon Brown. In the two decades since, the power wielded by Threadneedle Street has increased as its performance has got worse. It is hard now to remember how serene life was for the Bank in the early days after it was granted operational independence. Stripped of its role as supervisor of the UK’s banks, the Bank effectively became a monetary policy institute, with the nine members of its monetary policy committee tweaking the cost of borrowing to hit the government’s inflation target. With cheap Chinese goods keeping prices low, this was not especially hard to do. Mervyn King, the Bank’s governor from 2003 to 2013, called the late 1990s and the early 2000s the Nice decade – as in non-inflationary consistent expansion – and it was an apt description.
Apt, but incomplete, because while the Bank was congratulating itself on hitting the inflation target, it failed to do anything to prevent the biggest speculative bubble since the 1920s. To be fair, this was not entirely the Bank’s fault. The crisis exposed the weaknesses of Labour’s tripartite system of financial supervision, with responsibility shared between the Treasury, the Bank of England and the Financial Services Authority. But the Bank did not realise until it was far too late that crises can erupt even when inflation is low. Like other central banks, it was guilty of groupthink.Read more