Mervyn King is hardly the only central bank governor of a high-deficit country to be facing off against his government. In Spain, also ruled by a weak centre-left government, Miguel Angel Fernández Ordóñez has used strikingly similar language in ruling out further fiscal stimulus and in urging a return to budgetary sanity. Meanwhile, in Italy, where patience with Silvio Berlusconi, the prime minister, is wearing thin, rumours abound that Mario Draghi, governor of the Bank of Italy, might be prevailed on to head a government of national unity.

But Mr King’s differences with the Treasury and Financial Services Authority over the future of the UK’s tripartite system of financial regulation are of greater importance. In testimony this week, Mr King revealed the extent to which regulators in one of the world’s great financial centres have yet to agree on the lessons to be learnt from the banking crisis. Mr King’s claim that he has not even been consulted on the government’s forthcoming white paper on reform of financial regulation, which is likely to give the FSA a share in responsibility for financial stability, certainly does little to boost confidence that the Bank will swing into line in support of the UK’s proposed new regulatory framework.

Some believe that Mr King is placing his chips on the arrival of a Conservative government next year. His observation that the white paper would not be “the last word” on the institutional turf war between the Bank and the FSA suggests that may well be so. This is dangerous territory. Any suspicion that he is cosying up to the Conservatives, who have a testy relationship with the FSA, in defence of the central bank’s institutional interests could damage perceptions of its independence. Mr King should rely on the strengths of his arguments alone.

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