Bank of England Governor Mervyn King won a second term as head of Britain's central bank, the Treasury said today, ending months of speculation that he was out of favour because of the run on Northern Rock bank.
It had been reported last month that King would get the nod to run the BoE for another five years when his term ends on June 30th, but there have been numerous reports suggesting Prime Minister Gordon Brown would choose another candidate.
Mr King, who turns 60 this year, has come under much fire over the last year for his handling of the credit crunch hitting financial markets.
The former London School of Economics professor initially took a hard line this summer when interbank lending virtually dried up as financial institutions became wary of each others' exposure to risky US mortgage lending.
King's take was that people should have been aware of the risk they were taking and bailing them out with extra cash when their bets went wrong would only encourage such behaviour.
Moral hazard is not an abstract issue, argued Mr King, who has also taught at Harvard and MIT. City of London financiers were predictably angry.
But then Northern Rock, Britain's fifth-biggest mortgage lender, fell foul of the credit crunch and had to seek emergency help from the Bank of England in September, prompting the first run on a British bank in more than a century.