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Bankers with Borders

LONDON – When Mark Carney replaces Mervyn King as Governor of the Bank of England in July 2013, the world will be deprived of King’s witty public utterances. My personal favorite came when, commenting on strong retail-sales figures during one Christmas period, he cast doubt on their significance for assessing the state of the economy. “The true meaning of the story of Christmas” he solemnly intoned, “will not be revealed until Easter, or possibly much later.” A new career on the stage, or in the pulpit, surely beckons.

King’s most quoted phrase is that “global banking institutions are global in life, but national in death.” They trade globally, across porous borders, attaching little significance to the geographical location of capital and liquidity. But, when the music stops, it is the home regulator, and the home central bank, that picks up the tab, even if the losses were incurred elsewhere. By the same token, a failing bank may leave behind a mess in third countries, which its home authorities may not clean up.