King Urges Banks to Boost Capital as ‘Systemic Crisis’ Looms

Bank of England Governor Mervyn King urged banks to enhance efforts to bolster their defenses against the euro area’s debt turmoil, which now looks like a “systemic crisis.”

“An erosion of confidence, lower asset prices and tighter credit conditions are further damaging the prospects for economic activity and will affect the ability of companies, households and governments to repay their debts,” threatening banks’ balance sheets, King told reporters in London today. “This spiral is characteristic of a systemic crisis.”