Mervyn King, governor of the Bank of England, is making a power grab. The UK’s future financial regulatory structure is still being moulded and Mr King is setting out the case for putting his institution in charge. The government is resistant, preferring to work with the current distribution of powers. But it should give the governor what he wants. Mr King, in return, should show some contrition for the Bank’s mistakes.

Central banks have acquired many new duties since Walter Bagehot’s 1873 book Lombard Street set out the Bank of England’s role in dealing with financial panic. But, even now, central banks are natural institutions for systemic financial oversight. They remain the only public institutions that can provide liquidity.