About a month ago, I visited the aero engine factory of Rolls-Royce, in Derby. I was hugely impressed. Making jet engines able to work at extreme temperatures is an extraordinary achievement. Why does the financial industry not work this way? How might we bring the performance of finance close to that of other sophisticated businesses?

This is, in its essence, the question Mervyn King, governor of the Bank of England, was addressing in his controversial speech this week. His answer: break up the banks into “utilities” and “casinos” The former would be safe. The latter would live and die in the market.

Both Alistair Darling, the UK's chancellor of the exchequer, and Gordon Brown, the prime minister, promptly slapped Mr King down, arguing that this division does not work: Northern Rock, a utility mortgage-lender, failed, while the collapse of Lehman Brothers, evidently a casino, led to the most expensive financial rescue yet. This, they argue, is a misdirected remedy: the distinction between utility and casino either cannot be drawn or, if it can, does not coincide with the distinction between what has to be safe and what need not be. Yet it is evident why this distinction is appealing. If we define the utility parts of the financial system narrowly, as management of the payment system, it works like clockwork. It is in the management of risk (and the advice given to its clients) that the financial system fails. The limited liability businesses at the heart of our credit-based monetary system have a tendency to mismanage risk (and uncertainty), with devastating results.