He said such a radical measure "explicitly recognises that the pretence that risk-free deposits can be supported by risky assets is alchemy" and argued that a simple break-up would make it harder for banks to work around the rules.  "The attraction of the more radical solutions is that they offer the hope of avoiding the seemingly inevitable drift to ever more complex and costly regulation," he said. "The advantage of these types of more fundamental proposals is that no tax or capital requirement needs to be calibrated."  Banks are already facing the toughest regulatory overhaul in years with the capital and liquidity buffers being introduced under Basel III. However, Mr King said Basel is only the start as "even the new levels of capital are insufficient to prevent another crisis". The Goverment's £2.5bn bank levy is also "not a silver bullet", he said: "In the area of financial stability, it makes sense to have both belt and braces."  Banks have attacked new regulations and taxes for lumbering the industry with such high costs economic growth will suffer, claiming that as many as 10m fewer jobs will be created over five years as a result. Mr King dismissed the argument, saying: "The benefits to society, most obviously through greater financial stability, but also through factors such as higher tax revenue, are likely to swamp any change in the private costs faced by banks."  He added that official figures have overstated the value of the financial industry to the UK by using a misleading calculation. "The official estimate might have overstated UK financial sector value-added by almost £30bn [in the decade] to 2007 – around half of the growth in the official measure," the Governor said.  Shareholders were also misled by the banks' use of leverage to transform low returns on assets into large returns on equity. As a result, creditors will have to bear the risk previously covered by an "implicit" taxpayer guarantee. "Of all the many ways of organising banking, the worst is the one we have today," he said. "This crisis has already left a legacy of debt to the next generation. We must not leave them the legacy of a fragile banking system too."
Mervyn King, Governor of the Bank of England, has thrown his weight behind    breaking up the banks as part of wider reforms to protect the taxpayer from    another financial industry meltdown.