Allow banks to fail, says George

Eddie George (below), Governor of the Bank of England, yesterday told Japanese bankers that banks should sometimes - like Barings - be allowed to fail. Offering the Japanese, whose banking system has been teetering on the brink of crisis, the benefit of the Bank of England's experience, Mr George said: ''The essential point is that last-resort assistance should only be made available to prevent the emergence of a systemic problem, not to prop up an individual bank, no matter what bank it happens to be.''

Support had been withheld from Barings, one of Britain's most prestigious banks, because the Bank of England judged that there was little risk of its failure affecting other parts of the banking system.