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Mervyn King backs bank reform plans

Mervyn King has lent his support to calls for widespread reform of the global banking industry.

Speaking to the Treasury Committee, the governor of the Bank of England said that plans outlined by US president Barack Obama last week had merit, but he called for caution regarding their implementation.

’We need to recognise a range of different solutions will be necessary. It won’t be easy to bring about, and we can’t do it overnight,’ he was quoted as saying.

Mr King said that a situation needs to be created whereby taxpayers do not need to bail out failing banks in the future, but stated that he was against limiting the size of financial institutions, which was included in Mr Obama’s proposals.

The governor added that the most important thing is to demonstrate that the government is ’prepared to countenance major reform’.

Stock markets around the well fell after the US president’s announcement, due to fears that the proposed changes would have knock-on effects in other countries.

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