Jeremy Warner's Outlook: Gieve takes bullet for Government’s fury over Bank’s handling of the credit crisis

So farewell, Sir John Gieve. News of his resignation as deputy governor of the Bank of England rippled around last night's Mansion House dinner even as Sir John sat there at the high table, apparently unaware of the gossip around him.

What a farce the Treasury – or is it No 10? – has become that it should leak Sir John's resignation in such a disorderly fashion.

The deputy governor has been a marked man ever since a disastrous appearance before the Treasury Select Committee to explain the Bank's role in the Northern Rock debacle.

Now he's honourably decided to take the bullet for the Government's unhappiness with the Bank of England's handling of the credit crisis. He plans to leave next year, ostensibly to allow a new deputy governor – presumably Paul Tucker, the Bank's head of markets – to bed in new responsibilities for financial stability announced by the Chancellor at last night's dinner.

City dignitaries must have been left wondering whether the reforms outlined for the Bank of England – a clear statutory objective to provide financial stability, a smaller reformed court, a new financial stability committee, and more transparency in appointments – were a good or a bad thing.

There is little here that either the Bank or the City could seriously object to, but it is also hard to see what difference it might make. Defining a remit for financial stability is like trying to nail a blancmange to the wall.

In the inflation target, the Monetary Policy Committee has a clear objective. No such clarity can be brought to the new Financial Stability Committee, which in any case would be riddled with conflict of interest if staffed, as proposed, by City practitioners.

The Financial Services Authority is to be left with "sole" responsibility for banking supervision, which risks exactly the same confusion in supervisory and stability roles as contributed to the debacle of Northern Rock.

The City should nonetheless count itself lucky. The regulatory backlash has so far been relatively measured. It could have been a great deal worse.