The Sketch: Finance – it's so complicated that even the head of the Bank of England can't figure it out

King leafed through the Financial Services Bill, marvelling at MPs’ ability to understand it

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The Independent Online

Things are so complex now that no one knows what's going on. The professionals like it because it gives them well-paid work to do. It's a general rule in these, the final days.

The Governor of the Bank of England, Sir Mervyn King, was leafing through the Financial Services Bill marvelling at the ability of MPs to understand it.

"It's impossible to read – it's mainly drafted as amendments," he said. Nick Brown on the committee laughed, "We have a crib sheet." The Governor observed, "My version has two completely different sets of page numbers, one at the top and one at the bottom of the page."

Multiply this by itself a thousand times, add in a server's worth of algebra, and a War and Peace of algorithms, and you get to the financial products the clever banks are devising.

He said that regulation was far too legalistic and impenetrable – mainly because every time a regulation is made the banks invent a new product to get round it. The solution – I loved this – was to have things small or simple enough that if a bank is mismanaged it is allowed to go bust.

"That is not a regulatory failure," he said. And if banks conducted themselves in such a way as to be too opaque for regulators – they were probably too opaque for investors and managers alike. The remedy is old school. In the Chamber, Mark Hoban, Treasury minister, responded to an urgent question from Peter Bone and said he wasn't going to give a running commentary on EU events. (You couldn't talk fast enough, mate.) He said a number of things he probably shouldn't – that the euro "was collapsing" was one such. And then Chris Bryant declared that the minister "had said something I've never heard a minister say before."

And what could it have been? "That there is a 'remorseless logic in fiscal union'." This produced much scoffing as George Osborne hardly opens his mouth these days without saying this.

Indeed the idea that the Tories are encouraging fiscal union causes such a ripple in the force field around the Chancellor that Tories want to know what he means by it. There is rarely a cunning plan in politics but it is nonetheless true that fiscal union could trigger a referendum in Britain, which could force the Lib Dems to break up the Coalition, and be punished with electoral annihilation which could result in a Tory majority. In Tote terms – that's quite an accumulator.