The noises from Threadneedle Street and Whitehall over how future Northern Rocks are to be prevented remain deeply confusing. Alistair Darling seems to want to do for financial stability what Gordon Brown, his boss, did for monetary policy 11 years ago, when he created an independent panel of experts at the Bank of England to set interest rates.

“We should learn from the example of the Monetary Policy Committee,” the Chancellor told the Commons on Thursday. There would be “a similar approach in relation to financial stability so that we can bring in outside expertise to advise the Governor ...”

On the surface, the notion might seem appealing. After all, the creation of an independent MPC is one of the few policy decisions of the Labour years that still commands emphatic support in the City, in the wider business community and on both sides of the House. Until recently, the MPC has successfully steered a non-inflationary course, on occasion taking unpopular decisions without having to worry about interference from ministers with elections in mind.

It might also help to resolve the dispute between the Treasury and the Bank over the choice of Deputy Governor to replace Rachel Lomax, who leaves at the end of the month. Mervyn King, the Governor, has been pressing the case for his protégé Charlie Bean, the Bank's chief economist, while Mr Darling is said to favour someone with more City and markets experience.

The creation of a putative independent Financial Stability Committee to oversee that portion of the Bank's work would enable the Chancellor to save face while allowing Mr King to have his way.

But it only takes a moment's cogitation to realise that trying to create a replica MPC for financial stability raises all kinds of difficulties. We know very few details of what Mr Darling is envisaging, but monetary policy and financial stability policy require very different approaches.

The MPC has a mercifully narrow remit: keeping inflation as close to 2percent as possible. It has only one policy lever: adjusting interest rates. The decision making is still very awkward on occasions, but the target and tools could scarcely be simpler.

A putative Financial Stability Committee would have no such single target, and precious few levers to pull, either. Indeed, the actual power to curb behaviour by banks and other financial institutions that might threaten stability rests with another body entirely, the Financial Services Authority (FSA). One can picture ugly turf wars ahead.

Then there is the difficult question of who the panel of experts would be. If they really are to be capable of identifying the seeds of the next financial calamity, they need to be fully conversant with every esoteric corner of the financial markets, yet objective enough to blow the whistle on potentially dangerous activities.

Assuming the posts would be full-time, they must also be prepared to quit lucrative jobs in hedge funds and investment banks to work for humbler salaries. If the members of the FSC are to be part time, that would create glaring conflicts of interest.

Even if such paragons existed, one could reasonably ask whether the Bank should be drawing from the ranks of precisely those City grandees who lost the plot in the years running up to the credit crunch, failing to price risk properly and encouraging their employees to create and invest in products they did not fully understand.

Responsibility for financial stability is already spread across three organisations, the Treasury, the Bank of England and the FSA, which are supposed to work together through the Tripartite Committee.

It's hard to see how adding an extra panel of experts to this already cumbersome mix is going to help to identify and prevent future system-threatening calamities, nor how they would contribute to the delicate task of nursing a bank in intensive care, another area the Bank may take on.

The risk is that it gives more opportunity for buck-passing and confusion over responsibilities.

Identifying possible dangers to the financial system that could cause systemic failure has not been the problem in the past. The Bank's excellent twice-yearly Financial Stability Review has flagged up warning signs for years.

The Bank for International Settlements and the International Monetary Fund conduct similar reviews. Sub-prime lending and the reckless hunger for extra yield, the factors most responsible for the chaos of the past year, had regularly been flagged up as potential triggers for trouble.

The problem lies not there, but in the lack of political will and regulatory clout to force wayward financial institutions to change their ways. It has been the lack of appetite to challenge reckless financial institutions that has been at the heart of our regulatory failings.

Only if Mr Darling's new committee has the stomach for just such a fight will it make much of a difference.

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