Right call by No.10 in midst of crisis

That would be the sure way to make things even worse. In the Treasury and at 10 Downing Street, the penny has belatedly dropped, which is one reason why Mervyn King has been reappointed Governor of the Bank of England.

A Governor of the old school would have saved himself trouble. He would have looked grave and discreet, raised his eyebrows commandingly, and (as one such Governor put it) tried to sustain confidence without actually lying.

King's style is different and so, of course, is the Bank. For better or worse, its new form is Gordon Brown's legacy, and King is the man who has had to make it work.

He is the first Governor for a century not to have served as a banker before coming to the Bank. He made his career as a professor of economics, and must have been a natural teacher, loving argument and believing in it. His briefings on the Inflation Report are more like seminars. "Hands up," he cries in the heat of the argument.

Lord "Eddie" George, King's predecessor, was careful never to be outvoted on the Bank's monetary policy committee. King has twice let it happen, voting on the hawkish side on both occasions and sure he would be proved right. So far, he has been.

In the crisis over Northern Rock, responsibility was split three ways (all part of the Brown reforms) and no one can claim to have been right all the time. The big banks would have liked him to rush to their help with unlimited supplies of money. He thought this would only encourage them to make the same mistakes again. He said so. They hated it.

He looks right about that, too, for central bankers - just like other bankers - cannot afford to be soft touches, however popular it makes them for the moment. We can all be grateful that Number 10 has seen the light.