Mervyn King, governor of the Bank of England, is having a rather unseemly spat with Alistair Darling, chancellor of the exchequer, about the future of financial regulation, revealing tensions and poor lines of communication. Just as the detail of the government’s finance white paper starts to emerge, this has created clouds of uncertainty and mistrust.

While there are substantive disagreements between the two men, there is a consensus about most of what the new regulatory system should do. Both agree with Lord Turner, chairman of the Financial Services Authority, that capital ratios must rise, liquidity must be policed rigorously and banks must be made safe-to-fail. There must also be systemic supervision to make sure that every financial institution does not share the same, exposed Achilles’ heel.