Mervyn King warns of new financial crisis ‎

Mervyn King warns of new financial crisis ‎
# 05 March 2011 14:15 (UTC +04:00)
Baku – APA-Economics. Britain faces the possibility of a new financial crisis because of imbalances in the banking system, according to Bank of England Governor Mervyn King, Channel 4 News reported.

Mervyn King has also warned that the problem of banks being seen as "too big to fail" had not yet been resolved.
Mr King told today’s Daily Telegraph: "We allowed a (banking) system to build up which contained the seeds of its own destruction."
He continued: "We’ve not yet solved the ’too big to fail’ or, as I prefer to call it, the ’too important to fail’ problem. The concept of being too important to fail should have no place in a market economy."
The Bank of England governor has addressed the question of "moral hazard" – the possibility that a bank behaves different because it is insulated from risk – on previous occasions. In 2009 he warned that the government decision to bail out British banks had "created possibly the biggest moral hazard in history".
Responding to recent remarks by Stephen Hester, chief executive of the RBS bank in which the government holds a controlling share, suggesting that RBS should pay little tax and big bonuses, Mr King says: "Bankers were given incentives to behave the way they did. That’s what needs to change. We must resolve this problem."
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