Banks are making profits, and bonuses are back. The City has regained some of its swagger. So there is a widespread fear, given voice this week by Mervyn King, governor of the Bank of England, that the financial sector seems to have escaped from the crisis “with little real reform”. He is right to keep up the pressure for change. But this week during a speech in Edinburgh, he proposed doing more than seems necessary.

The governor suggests introducing a division between “utility” banking – deposit-taking and loan-making – and more exotic financial functions. His thoughts are similar to proposals made by Paul Volcker, former chairman of the Federal Reserve, who has called for commercial banks to be banned from heavy volumes of proprietary trading or owning hedge funds.