King reappointed as Bank governor

Mervyn King was today handed a second five-year term as Governor of the Bank of England.

The appointment, which is made by the Queen on advice from the Prime Minister, will take effect when Mr King's current term of office expires on June 30.

Mr King's position has been under close scrutiny following criticism of the Bank of England's handling of the Northern Rock crisis.

Chancellor Alistair Darling said he was "delighted" that Mr King had been reappointed as Governor.

He added: "He has played a key role in delivering macroeconomic stability in the UK, and his leadership and experience will continue to prove invaluable to the Bank of England."

Mr King, who also acts as chairman of the Bank's Monetary Policy Committee, was Deputy Governor from 1998 to 2003.

The Bank of England's role in the Northern Rock crisis has been criticised by some MPs, in particular that the Bank attached too much weight to the "moral hazard" argument of not offering incentives that would encourage banks to take on more risk.

MPs on the Treasury Select Committee wrote last week: "In our view, the lack of confidence in the money markets was a practical problem and the Bank of England should have adopted a more proactive response."

At a committee hearing in September, Labour MP George Mudie (Leeds East) accused the Bank of "watching the train hit the buffers", but Mr King replied that the Bank had given time for Northern Rock to attempt to raise funding by selling assets, or arrange a takeover, before stepping in as the lender of last resort.

He said that earlier interventions would have panicked markets and "blown up the train before it hit the buffers".