The Governor of the Bank of England has described the extent of the bailout of the UK's financial institutions as breathtaking.
Speaking to members of Scottish business organisations in Edinburgh, Mervyn King said that the banking sector had been propped up to the tune of almost £1 trillion – close to two third of the annual output of the entire economy.
"The sheer scale of support to the banking sector is breathtaking," he told the audience.
"To paraphrase a great wartime leader, never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little reform."
Mr King hit out at the Government and the G20, describing their plan to cut the risk of providers through regulation. "The belief that appropriate regulation can ensure that speculative activities do not result in failure is a delusion."
He went on to suggest that banks should have their operations separated so that riskier operations are separated from day-to-day banking, and do not benefit from being protected from the Government.
Mr. King rejected suggestions that such a plan would be hard to put into practice, saying it was hard to see why protection could not be limited to the retail banking sector only.
However, chief executive of the British Bankers' Association, Angela Knight, said: "The Governor has long held this view. We believe the key issue is not one of breaking up banks but of financing the economy. Our mixed banking model provides choice: big businesses may want big banks which offer a range of products and services while individuals may look to something smaller.
"There is a clear and unambiguous requirement for universal banks and that is acknowledged by authorities in all countries."
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