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Does the Old Lady need an economist or an ex-banker?

3 June 2008

The Financial Times says Alastair Darling and Mervyn King are at odds over who should be the next deputy governor of the Bank of England.

Darling’s said to want someone with a City background, who can restore the Bank’s damaged reputation in the wake of Northern Rock.

King, a former professor at the London School of Economics, is said to prefer someone in his own image, and is calling for the appointment of a deputy with a professional background in monetary policy.

Rising inflation and problems at leading banks like RBS and Bradford & Bingley make the appointment an important one. So who’s best placed to strengthen the Old Lady at this juncture – a practitioner or a theoretician? Share your thoughts below.

Comments (9)

Mervyn King is not up to the task and we do not need another academic at the BoE. Mervyn is only good at lecturing. Let's join the Euro to get rid of Mervyn and his mates.

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Comments (9)

  • The Bank of England is staffed by whispy haired academics who last ventured out of their ivory towers around the time of the Rennaissance. Northern Rock was a shambles, Lomax was inept and Darling is dithering. This is an invaluable opportunity for the City to get a proper spokesman in a pivotal institution. Let's pray they don't blow it.

    Ralphie 03 Jun 2008

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  • Mervyn King is not up to the task and we do not need another academic at the BoE.  Mervyn is only good at lecturing.

    Let's join the Euro to get rid of Mervyn and his mates.

    Patrick 03 Jun 2008

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  • Hang on. Sitting in the City somewhere (as I'm supposing you all are), it's easy to assume that bank crises are what matter and the Bank of England needs someone to be chummy with the bankers who've made the mess we now find ourselves in. But don't forget that there's also the little issue of erm...inflation.

    If inflation gets out of control you can kiss goodbye to big banking profits and whisper hello to a major recession when interest rates have to be hiked so high that Joe average can't get by any more.

    What we need now is a proper monetary economist who can get inflation under control before it gets even worse than it already. Precisely what we don't need is some kind of banking pansy who can hold the hands of idiots with inadequate capital provisions and out of control lending policies in the vain hope that they'll behave a bit better in future.

    Susie K 03 Jun 2008

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  • King just wants someone who won't threaten his own tenuous grip on the situation. Time to get rid of him, not to appoint someone else in his image.

    Jerome 03 Jun 2008

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  • The real point is that monetary stability is also about liquidity risk and the Bank of England isn't going to have a hope in hell of getting its head around this unless it appoints someone with more than a passing knowledge of financial markets.

    Ranting Rog 03 Jun 2008

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  • As someone working in the City in Investment Research and having studied economics at university, my opinion is that employing an ex-banker could create biases and potential conflicts of interests at the BankOfEngland. The BofE mandate is to control inflation and not as a get of jail card for badly run banks like Northern Rock. Northern Rock deserves to go down and let this be a lesson learnt. If some bankers are fired as a result of the credit crunch, so be it..they deserve to go for the years of over indulgence, sheer stupidity and excessive greed. The best people to control the economy are elite economist and not fat cat ex bankers who cannot even run their own firm, let alone the UK Economy.

    anon 04 Jun 2008

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  • Mervyn King did what he could, acting fully within the scope he was allowed.  Mervyn has been brilliant and so has Charles Bean. The have records that demonstrate this over a long period.

    Both are not only academics but also able to apply themselves practically. The record shows that they, with charles Goodhart, predicted the 1987 crash and made money for LSE Ltd. King also warned against CDOs well before the problem took place.

    The mandate of the BoE does not include acting like an investment, merchant or retail bank.

    KD 04 Jun 2008

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  • If london wants to keep his position of european capital for financial services, than it may need to join the euro since the weak sterling is a huge problem and at the moment I dont see how the sterling can strenghten against euro... it is probable to expect a further decrease of the sterling mainly because of strong continental european exports... also, the UK has sold a lot of monarchy's gold just few years ago, to buy US dollars... can you figure out how much big losses they've got! I hope the UK will join euro. Regarding the BoE governor, honestly I dont understand how he could have stoped the drop in house prices and the consequent bail out of some USA-UK banks... what is happening now is the negative side of speculation. with speculation you can make profit or losses, and this is the time of losses...

    VV 05 Jun 2008

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  • The government, BofE are losing creditbility rapidy for even suggesting city bankers should work at the BofE. Darling is brain dead..when are the elections?

    anon 06 Jun 2008

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