Mervyn King, Bank of England governor, has called for Britain’s biggest banks to be split to prevent a future financial crisis. Mr King irritated Gordon Brown, prime minister, and chancellor Alistair Darling by arguing banks should be split between “utility” retail operations and riskier investment banking arms, cutting them down to size to ensure they were not “too important to fail”. Should big banks should be broken up? Join the debate. Click on “Comment” to add your views.
Martin Wolf: Why curbing finance is hard to do
Mr King raises the right issue. I agree with him, too, that the two alternatives are either to make institutions that are “too important to fail” too good to do so or to be able to fail any institution, even in a crisis.
Mohamed El-Erian: The two-stage de-risking of banks
Most European countries will be reluctant to abandon the universal banking model, arguing that the crisis was primarily an Anglo-Saxon creation. The most consequential battlefield will be in the US, where the opposing camps are already digging their heels.