I F anybody went along to the Queen’s Hall hoping to hear Mervyn King, former Governor of the Bank of England, apportion blame for the 2008 financial crash which happened on his watch, they would have been sorely disappointed.

For from the outset we were told that his book was intended to be neither “another account of the crisis” or a memoir, which often, he observed, turned out to be simply a veiled defence of the author’s actions.

Rather, T he End of Alchemy: Banking, the Global Economy and the Future of Money is intended more as a road map for a new economic future.

“During the crisis, what struck me was that I thought...we had misunderstood what was going on and I thought we needed new economic ideas,” he told BBC Look North’s political editor, Richard Moss.

Individuals were not to blame for the crash, he said. “I think this is a failure of the system and many of the individuals in it were trapped in what was a prisoner’s dilemma – there was nothing they could do about it.”

Lord King referred to Citibank’s chief executive Chuck Prince, who on the eve of the crisis famously said, in relation to leveraged lending practices: ‘while the music is playing we have to stand up and dance and we are still dancing’.

“It’s clear they (Citibank) would have earned much lower profits and he himself would almost certainly have been fired,” said Lord King.

“And I think the same was true of many government banks – they could see there was something unsustainable but couldn’t work out what they could do on their own.”

Lord King outlined his ‘big idea’ of the Bank of England transforming from ‘a lender of last resort’ into ‘a pawnbroker for all seasons’.

He would like to see central banks behaving like pawnbrokers, which he holds would put an end to recklessness and stop any future taxpayer-backed bail-outs.

Lord King recalled writing a cheque for £36bn during the height of the crisis, which he quipped earns you “an enormous amount of street cred, especially with professional footballers!”

The problem was the banks didn’t have any security. “In Bagehot’s (the economist, Walter Bagehot’s) day, banks had to have assets to bring,” he said.

“We were having to lend like a pawnbroker, but many of the gold watches we were brought were broken and tarnished.”

A compulsory insurance scheme would go some way to protecting taxpayers from the fall-out of future financial crashes, he believes.

For we won’t ever get to a position where governments will never have to bail out the banks again he warns, “because with the best will in the world, bad things happen.”

The Bank of England would carefully examine their balance sheets and decide how much to lend. Banks then will have a guaranteed cash credit line. That leaves the banking system to operate as it does now. We should insist on letting the central bank be the pawnbroker, a pawnbroker for all seasons.

“If everyone knew that the bank in which you made your deposit had a guaranteed cash credit line with the Bank of England, then there’s no reason to join a run on the bank and that would end the alchemy.”

Lord King is frustrated at the ongoing use of ‘quantitative easing’, despite having used it as a short-term fix in the aftermath of the crisis. “Interest rates seem to be getting lower and lower and everyone is relying on monetary policy,” he said.

He worries about the younger generation faced with borrowing vast amounts to get on the housing ladder at the same time as wondering how much they should save towards a pension.

So, is there any light on the horizon we might wonder. Well, he believes the downturn will eventually end – but not any time soon.

“In 2008, in a pretty short period, our national income fell by about 15 per cent relative to where it would have been. I see absolutely no reason why we can’t make that up – it depends on having enough people in employment.

“And since I believe this is a golden age of science and technology..my belief is we have not lost in any real sense the potential for productivity.

“It might take 30 years, but I think we are quite capable of getting back on to the growth path.”

Lord King addressed a range of rigorous questions from the floor on, amongst other things, lack of regulation, the shadow banking system and whether there is a crisis of capitalism.

Then he faced Richard Moss’s final grilling – the one we were all most interested in – whither on BREXIT?

Lord King declined to comment, saying only that he felt “we haven’t really had a serious presentation of all the arguments” and that in Scotland, the referendum settled absolutely nothing.

“I don’t want this referendum to settle nothing here,” he added.

The BBC didn’t get their exclusive then – and neither did we. But it was a fascnating evening nonetheless.

Pauline Holt