Examination of Witnesses (Questions 2420-2422)
MR MERVYN
KING, MR
PAUL TUCKER,
MR ANDY
HALDANE AND
MR ANDREW
BAILEY
26 FEBRUARY 2009
Q2420 Chairman: Can we await that
shortly then?
Mr King: Yes, I think you can
expect that there will be an exchange of letters and that we will
be able to explain that to you in more detail when we come back
again in March.
Q2421 Chairman: Good. Lastly, Governor,
the genesis of the present crisis: how much do you put that down
to the major imbalances within the global economy, how much are
they receding and what prospect is there for re-balancing?
Mr King: I think that was a major
factor in making this possible and I think it is very important
that we are not just diverted into fields of regulation and the
behaviour of banks and incentives. They are undoubtedly important
but it is not the sole thing. The financial imbalances I believe
generated capital flows which were the underlying cause of all
these problems, and what we are going through now in the world
downturn is leading to changes in those imbalances, undoubtedly.
What we do not have is an international monetary system that will
prevent those imbalances from being created again, and that is
what is so important now.
Q2422 Chairman: In terms of our inquiry,
Governor, we hope to come out with a report within a month or
so but we are following that up with the international dimension,
which is very important, and if we can receive any evidence from
you on that, but also on the issue of public confidence, because
we were in Japan in October and the message there was that you
have got to take the public and the consumer with you. I think
there is a lot yet to do in that area.
Mr King: We are very conscious
of that. If there was an area where we would really have to improve
and work harder, it is undoubtedly in the area of communications.
That is easier said than done. I do not think we shall be popping
up all the time on the regular programmes but we need to be able
to explain clearly and simply what we think the problems are and
what we are doing to put them right. If I could take the opportunity
now: we will come through this. There have been downturns and
financial crises in the past. Undoubtedly we will come through
this. It will not go on for ever. It will be painful but we will
come through it and I think we will have learned some painful
lessons but lessons that will enable us to improve the system.
Chairman: Governor, we have given you
notice of that. Maybe you could do some fresh thinking for us.
We have found your evidence and that of your colleagues at the
beginning of this inquiry very helpful in helping to formulate
our policy. That just leaves me to wish Mr Paul Tucker every success
in your new job. Thank you very much.
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