Speaking before the TSC earlier this week, Chancellor George Osborne said that the new regulatory system makes clear that King will be fully in charge in the future, helping to prevent another financial crisis.
He said: “In peacetime, the Governor is in charge. In times of crisis and when public money is involved, the Chancellor is in charge.”
While King is one of the most respected and influential bankers in the UK, putting him at the head of the new regulatory system is undoubtedly a big and risky move by the Chancellor.
People haven’t forgotten that it was the banks that were ultimately responsible for causing the 2007 financial crisis.
Osborne’s plans will see him undoing a lot of Gordon Brown’s work when he became Chancellor back in 1997, transferring regulatory power to the Bank of England and abolishing the Financial Services Authority.
So, will Osborne succeed where his predecessor failed? Will the Chancellor really create a better regulatory system?
Osborne and his cronies have made it clear that they have the utmost faith in King to help steer the economy on the road to recovery and avert another financial crisis.
Yet, I’m not sure the British public is entirely convinced.
With fiscal tightening, public sector cuts looming and unemployment still rising, the economy looks set to continue on a downward trend.
This is not to mention King’s defense of keeping the base rate at 0.5% as inflation accelerates to 4.5% – more than double the Bank of England’s target.
The TSC also expressed its concern over the various hats that King will wear in the new regime. Under the proposed structure, King will chair both the Monetary Policy Committee and new Financial Policy Committee.
Outside of the banking world, King has added another commitment to his portfolio – a directorship at the All England Tennis Club Association, where he enjoyed several stints at Wimbledon last week.
He is clearly a man with a lot on his plate.
So, should Osborne be handing over unprecedented powers to one of the busiest and overworked men in the UK?
Osborne insists that King can handle it. He told the TSC: “The Governor has an important job to do. The Chancellor normally copes, I’m sure the Governor will too.”
I have never felt more reassured.
