bank of england governor says separate the banks

CSM's campaign to separate higher risk 'casino' banks from traditional retail banks received a boost yesterday from the Governor of the Bank of England.  Mervyn King argued that banks should separate, with more risky activities being split out.

Speaking to Scottish business organisations, King made the case for separating the banks: "Anyone who proposed giving government guarantees to retail depositors and other creditors, and then suggested that such funding could be used to finance highly risky and speculative activities, would be thought rather unworldly. But that is where we now are."

Echoing CSM's campaign, King maintained that regulation was not enough, saying “The sheer creative imagination of the financial sector to think up new ways of taking risk will in the end, I believe, force us to confront the ‘too important to fail’ question. The belief that appropriate regulation can ensure that speculative activities do not result in failures is a delusion.”

His comments effectively support CSM's campaign to separate banks into 'casino' banking and more traditional retail banking operations.  CSM is supporting Early Day Motion number 2008, which makes this call.