We prevented Great Depression repeat: Mervyn King

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We prevented Great Depression repeat: Mervyn King

The action taken by the Bank of England during the financial crash may have prevented a repetition of the Great Depression, its former governor Lord King has claimed.

Lord King said: “We did prevent a repetition of the Great Depression, which otherwise would be very much on the cards, had we not taken the actions that we did.”

The former governor, who was guest editing the 29 December episode of Radio 4’s Today programme, said it was difficult to explain that measures such as quantitative easing were used to prevent the economy from worsening.

He said: “People thought it (quantitative easing) was terribly unusual. This in fact was a standard textbook instrument.

“What was unusual was since the post-war period, governors of the Bank of England were trying to stop the amount of money in the economy growing too quickly.”

Lord King also claimed that he and his American counterpart, former chairman of the Federal Reserve Ben Bernanke, had been trained to deal with situations like the banking crash.

But in an interview on the programme, Mr Bernanke said: “I felt like a pilot in a cockpit, always trying to keep on eye on every light that was going red.”