Osborne’s choice for governor of the Bank of England will do nothing to prevent the next collapse of the financial system.
Today the chancellor confirmed that there will be no real change at the Bank of England. There will be no change to the Treasury and Bank of England’s obsession with inflation targeting and “price stability”. Above all, he confirmed that there will be no reining-in of the banks; that banks will not be re-structured – to separate the retail and investment arms, and ensure that banks are no longer too big to fail.
He confirmed this by appointing an ex-Goldman Sachs banker, Mark Carney, as governor of the Bank of England.
The FT was right when in January this year it described Carney as [FT paywall] ”the leading example of a new breed of ambitious, internationally focused central bankers who view regulatory and monetary policy issues through a more market-based lens”. He favours an “open and resilient financial system” – code for giving the banks free rein in global capital markets. And like many of his peers he believes that the key to recovery lies in all western economies “capitalising on the immense opportunity that emerging markets in general and China in particular represent”. Like others, he prefers exports over the expansion and strengthening of domestic markets.
So be very afraid. Business-as-usual will prevail. And nothing will be done to constrain the City, and therefore to prevent the next collapse of the financial system.