British finance minister Alistair Darling welcomed the Bank of England's decision this week to halt its 200 billion pound ($314 billion) quantitative easing (QE) programme.
"As far as the BoE's decision today (Thursday), what it voted to do was to pause in relation to QE and but it will keep the situation under review. I think that's very sensible," Darling said in an interview with a group of correspondents from G7 countries.
"That's a decision for the MPC (Monetary Policy Committee) which is rightly independent of government, but I think their decision was right," he added in a transcript of part of the interview released by the Treasury.
When asked about U.S. bond fund Pimco saying high government debt meant gilts were "resting on a bed of nitroglycerine", Darling said: "In the markets people say things for different reasons, if you look at the commentators as a whole they rather take a more sensible view."
Darling also said he saw no prospect of Britain, which has a record budget deficit, facing similar troubles to Greece.
"Our economy is much, much bigger, look at what informed opinion says about our economy."
"It's a large economy, it's got a lot of capacity in it. We have a very clear plan to halve our deficit over a four-year period."
"I've said that if growth turns out to be more robust than I'm forecasting then maybe we can do more, our structural deficit comes down by two-thirds during that period.
"So we are taking action. I've made it very clear that to do so prematurely risks derailing the recovery, once the recovery is established we will take the necessary action."
VOLCKER RULE
Finance ministers of the Group of Seven leading industrialised nations are meeting in Canada on Feb. 5-6.
Italian newspaper Il Sole 24 Ore, one of the newspapers which interviewed Darling, quoted him as saying that breaking up banks and going it alone was not the way to fight the crisis, preferring global coordination.
U.S. President Barack Obama sent shockwaves through markets with proposals to force commercial banks to cut ties with hedge funds and private equity funds and stop proprietary trading.
When asked about the so-called "Volcker rule" to limit risky trading, Darling said: "There has been a lot of talk about the division of banking activities and I confirm that I do not think this is the right way," according to Il Sole.
"The U.S. banking reality is very different to the European or British one … The biggest risk last year was the system, or the contagious effect between institutions. The danger is not the size of institutions but the inter-connection."
Darling said propriety trading should not be impeded but "it should be sustained by adequate capital". He said no one could yet say that the global crisis was over.
"There is no need to be tempted to give national responses to a global crisis … I really would not want for the European and U.S. ways on banking rules to begin to diverge," he said.
