Statement by Mervyn King

House of COMMONS
MINUTES OF EVIDENCE
TAKEN BEFORE
TREASURY COMMITTEE
January 26, 2009

Statement by Mervyn King:

"I know. I am looking forward to my retirement and I will not have had enough of it, so let us put it up to 2030, shall we - enough of my retirement to enjoy it. I would like to see a world in which there were more, probably smaller banks which specialise in different activities. The world in which we have a small number of institutions that pretended that they could operate in every country of the world doing every conceivable kind of financial activity is a bit of a recipe for concentrating risks. The narrow banking thing is part of the scene, and it is important because how you protect retail depositors is important here, but it is not the only part of it. Indeed, you will never be able to get the narrow banking solution to work unless you can solve the problems in the other part of the banking system - otherwise, deposits will leak out of narrow banking back into the wider banking world. You have to deal with the whole thing. I think we will have a different way in which people will think about their transactions deposits and the payments system, a different way in which we organise investments. I would encourage you, if you do visit the United States, to talk to people, like Professor Kotlikoff, who have a much wider vision of how the financial system can ultimately end up. I think it is worth having that wider vision."