Bank governor King states case for financial reform

3 June 2010

Mervyn King has said the new coalition government should be viewed as an opportunity to introduce major banking reforms.

The governor of the Bank of England (BoE) called for "additional policy tools" to prevent excessive growth in the financial sector and ensure no repeat of the banking crisis of 2008.

In his foreword to the central bank's annual report, King said: "The system cannot be allowed to revert to its former ways as if nothing has happened. We must seize this opportunity for reform."

The new government has agreed to appoint an independent commission to investigate the prospect of separating retail and investment banking - a measure advocated by the governor.

New powers giving the BoE the authority to police other institutions could be introduced when the government's emergency Budget is unveiled later this month.

King's comments were made as it emerged he has refused a pay rise for the next two years.

The 62-year-old is eligible for a 2.5 per cent rise but has opted to keep his salary at £305,764, the bank's annual report revealed.

By Asim Shah

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