The minutes of the Bank of England monetary policy committee’s October meeting were mildly upbeat in tone but gave few clues on future policy. The next meeting, on November 5, is the key one for quantitative easing. The minutes are here.
There was rather more meat in Mervyn King’s speech on Tuesday evening. Remember his ‘moral hazard’ worries at the start of the crisis two years ago? He’s even more worried now that governments have shown themselves willing to prop up banks, and fears that could encourage even more risk-taking.
“It is hard to see how the existence of institutions that are “too important to fail” is consistent with their being in the private sector,” he said. “Encouraging banks to take risks that result in large dividend and remuneration payouts when things go well, and losses for taxpayers when they don’t, distorts the allocation of resources and management of risk.”
Does that mean state banks or a break-up of existing ones? Like Adam Posen at the weekend, he thinks the UK’s banking system is far too concentrated. The speech is here. Finally, the CBI’s industrial trends survey is reasonably upbeat.
Originally published at David Smith’s EconomicsUK and reproduced here with the author’s permission.
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