The banks have been addressing their bad debt problems and have been assisted in this by capital support from the Government; two of the weakest banks have been nationalised and subsequently sold back into private ownership; and four mega-mergers have been announced which offer the banks concerned the chance to improve their competitiveness at home and abroad. However, you will be more aware than I am that important challenges lie ahead for the Japanese banks. The domestic environment within which they are operating is still uncertain. Although the Japanese economy is showing signs of recovery, the IMF has recently pointed out that the pickup remains “fragile and subject to downside risks”. Consumer confidence is still weak and the corporate sector remains under some strain as shown by the rise of 21% in corporate bankruptcies in the year to July. The recent termination of the Bank of Japan’s zero interest rate policy has led to fears that corporate finances may be put under further pressure. This is a difficult environment in which the Japanese banks are embarking on their mergers. From my discussions with the banks concerned it is clear that they know what needs to be done in order to achieve the desired synergies and economies of scale. But it all depends on the quality of the implementation. Unlike the case with some past Japanese mergers, the banks will need to achieve full integration in their operations, technology, management and culture as quickly as possible, and jobs will have to be lost.

And second, we must ensure our institutions and markets are sources of strength for the global system. Fulfilling these dual responsibilities requires the highest standards of supervision and regulation, and a commitment to the most effective cooperation with other regulators. Let me take those in turn. III. The UK Targets a Level of Resilience Beyond Global Minimum Standards  As the FPC has repeatedly made clear, the UK financial system will require a post-Brexit level of resilience at least as great as that currently planned, which itself generally exceeds that required by international baseline standards. This imperative reflects the scale, complexity and importance of the UK financial system. This does not mean we are pursuing the stability of the graveyard. Rather, we are building the necessary resilience for our system as efficiently as possible by simultaneously implementing major structural reforms. Such “efficient resilience” allows the UK financial system to fulfil both its domestic imperatives and its international responsibilities. 7  See ‘The Promise of FinTech – Something New Under the Sun?’, speech by Mark Carney, 25 January 2017, available at http://www.bankofengland.co.uk/publications/Documents/speeches/2017/speech956.pdf. 5  All speeches are available online at www.bankofengland.co.uk/speeches  5  Efficient resilience is why our capital standards are simultaneously well above Basel minimum requirements and substantially below the levels that would be necessary if those banks could not be safely resolved if they got into trouble. 8  Efficient resilience is why we are ring-fencing the domestic banking services on which UK households and companies depend.