The first question, if there is to be a political row, will be where to put the blame, apart of course from the immediate culprit, Rupert Pennant- Rea himself. Should the Bank have spotted the problem and ejected him earlier? Or was there nothing it could sensibly have done?
The fact is that the Bank of England's best defence is one it cannot possibly use for fear of compromising its own relationship with the Government. It is that Mr Pennant-Rea's appointment was imposed on the Bank in a last- minute rush by Downing Street, as a condition for the Prime Minister's agreement to the promotion of a Bank insider, Eddie George, to the top job.
It is hard to be sure from this distance whether, if more had been known about his lifestyle at the time, it would or should have disqualified him from the job. But if a mistake was made in overlooking possible future problems, it was not by the Bank, which had rather less to do with the appointment than it would have liked. Rather, it was made by John Major and Baroness Hogg, the Prime Minister's then adviser, who is credited with playing a critical role in the decision.
The political priority at the time was to find an outsider to counterbalance Mr George, who the Government saw as too headstrong and dominant over his senior colleagues to be trusted with the governorship without some external restraint. Mr Pennant-Rea was Sarah Hogg's last-minute solution to the problem. He had 24 hours to decide whether to take the job.
The new deputy governor, it seems safe to assume, will be appointed in a less pre-emptory way, and only after a period of discreet vetting. When Mr Pennant-Rea got the job, Mr George was in no position to argue with the choice, since he was unsure whether he himself would succeed in his bid for the governorship. Circumstances could hardly be more different now. Mr George has established his credentials with the Government as an essential part of the Ken and Eddie double act, which gives him more influence over monetary policy than any Bank governor in living memory.
Whether the new candidate comes from inside or outside the Bank, Mr George will certainly have a veto and may well be allowed to make his own choice of deputy. The odds are against an insider, since there are still strong suspicions that the other executive directors are too much under Mr George's thumb. There will be real costs if the reforming mandate that Mr Pennant- Rea was given - and the momentum that he had begun to generate - is now lost.
The most sensible place to look outside will be at a senior but probably not the very top level in a financial institution or even an accountancy partnership. The ideal solution would be to find a new deputy with practical business experience to take on a chief executive role at the Bank, complementing the Governor's command of monetary policy and the wider political agenda.
There is no question that the Pennant-Rea affair will damage the standing of the Bank in the City, at least in the short term. In the same way that the integrity of the judicial system is threatened by revelations about the private life of judges, so the authority of the Bank is at risk from the last two days' disclosure. Central bankers, after all, are meant to be fanatics about inflation and to go to bed with the latest monetary statistics.
It is not as if the Bank does not already have other problems on its plate. It is not yet out of the wood over the Barings crisis, and the pressure for its supervisory functions to be taken away continues to build. The next 12 months will also provide a critical test of how robust the new arrangements for imposing inflationary discipline on the economy through greater transparency are.
So what happens next to the Bank does matter. In itself, yesterday's resignation says nothing about what will happen next. But to the extent that it leads to any shift in the balance of power, either within the Bank or between itself and Downing Street, the ramifications could yet outlive the sensational manner of the deputy governor's going.
Humility and a new boss at the Pru
The actuaries must have been crying into their beer last night in Holborn. The monopoly of top jobs that number-crunchers traditionally enjoyed at the big insurance companies has been crumbling in recent years. Yesterday the mighty Pru dealt them another blow with the appointment of Peter Davis (a publisher, for heaven's sake) to the hotseat previously occupied by the considerable figure of Mick Newmarch.
Of course, Mr Newmarch himself was not, strictly speaking, an insurance man, having risen through the investment side of the business. However, he had spent almost 30 years at the Pru, man and boy, before he moved into the chief executive's suite. Mr Davis by contrast is the first outsider in history to run the Pru. It is a bold - and necessary - move by the company, which, with Mr Newmarch's abrupt departure and Sir Brian Corby's impending retirement, stands to lose almost 80 years of insurance experience at the top.
The appointment of the former Reed boss was warmly received by the City yesterday, reflecting both his reputation as an effective manager and the way in which the insurance industry is changing. The Pru could have opted for the soft choice of a safe pair of grey insurance hands to follow the flamboyant Mr Newmarch. Mr Davis is too powerful and dynamic a figure to let the company coast. Once he has learnt the business, he will direct the destiny of the Pru, for better or worse, rather than letting the group be swept along by the changing tides in the industry.
The public confidence in the probity and competence of the industry has been shaken by the mis-selling of pensions scandal. The Pru, as market leader, has an important role - and a big interest - in reversing this trend. Mr Davis's reputation as a marketing specialist should serve well in this respect. The company gave a first welcome sign of new-found humility with yesterday's results, admitting that provisions against pensions mis- selling had been raised, despite Mr Newmarch's belligerent assertions that the Pru had done no wrong. About time.