George Osborne moved to redress what he described as the spectacular regulatory failure of the City, announcing the abolition of the Financial Services Authority and a sweeping increase in the Bank of England’s powers.
Mervyn King, the Bank’s governor, will become one of the most powerful central bankers in the world, with a new remit to prevent the build-up of risk in the financial system in addition to his monetary policy role.
Mr King told a City audience at Mansion House on Wednesday night that his new role in enforcing financial stability was to “turn down the music when the dancing gets a little too wild”.
Mr Osborne confirmed his plan to split up the FSA – a creation of Gordon Brown in 1997 – which the chancellor largely blames for failing to spot the approaching financial hurricane and the weakness of banks like Northern Rock.
Full story: FT.com / UK / Politics & policy – Osborne abolishes FSA and boosts Bank