One of the many assumptions about bank regulation to be
shattered by the financial crisis was that the lender of last
resort model was still relevant. The events following 2008
prove that an alternative is needed. Here, speaking exclusively
to IFLR, former Bank of England governor Lord Mervyn King
explains his solution.
With reference to his new book The End of Alchemy, and with
a keen eye for crises past and policy new, Lord King also
examines the nature of bank failures, the complexity of
regulation, the prospects for transatlantic regulatory
coherence and more.
You’ve written a fascinating book. How
did The End of Alchemy come about?
I suppose it came about because, during the crisis, everyone
was talking about who was to blame and it dawned on me that
this was an inadequate approach. There was a failure of
economic ideas before and during the crisis,...