And the Bank is thinking through how regulation may need to change with the investment needs of the new economy, including new approaches to risk models and secured lending in a world of intangible capital and data-based finance. 9  In April 2018: https://www.bankofengland.co.uk/news/2018/april/non-bank-psp-access-to-the-payments-system-announcement. McKinsey World Payments Map (2016). The G20’s LEI, which originated as a risk management tool for the financial sector, standardises identities for companies. See https://www.bankofengland.co.uk/news/2018/june/iso-20022-consultation-paper-a-global-standard-to-modernise-uk-payments. 10 11  6  All speeches are available online at www.bankofengland.co.uk/speeches  6  b) The New World As the UK economy changes, the world is being reordered. Over the past quarter century, emerging economies’ share of global activity has risen from 40% to 60% and their share of global trade from one fifth to one third. Yet at present, their financial assets make up only 10% of the global financial system. This will quickly change. As emerging market economies continue to open up, their share of global financial assets could treble to around a third by 2030. Maintaining the UK’s share of cross-border capital flows during this process could plausibly increase the balance sheet of our financial sector we host from the current 10 to 15 times GDP by 2030. This will significantly boost UK prosperity – provided the associated risks of such an open system are managed responsibly. Responsible openness rests on three pillars. The first is strong global standards. The UK has been at the forefront of G20 reforms to create a global financial system that is safer, simpler and fairer.

Implementation is now being regularly assessed and transparently reported by the FSB and the IMF. This second pillar is deep supervisory cooperation. To manage cross-border challenges to financial stability, international authorities must share relevant information and work together. As the home to four, and host to the other 26, globally systemically important banks, the Bank of England participates actively in all major supervisory colleges, sharing information and expertise gained from overseeing the multitude of complex risks unique to London. We expect the same from those whose firms operate and take on large risks here. The PRA’s open, cooperative approach to supervision means wholesale activity in London can remain globally-integrated and highly efficient, without compromising resilience. 12  The third pillar of responsible openness is ending ”too big to fail”. With enhanced resolution powers and planning, the Bank of England now has the ability to resolve failing banks. The UK’s major banks are on track to complete this year the ring-fencing of their critical domestic high-street businesses from their riskier wholesale activities. And they already hold loss absorbing resources of 25% of their risk-weighted assets against a 2022 requirement of 29%. As a consequence of this progress, market discipline is returning, with the public subsidy enjoyed by the largest banks having fallen by 90%. Now is the time to reap the benefits of these enormous efforts. Platforms are being created for deference to each other’s approaches when they achieve similar outcomes. With the three pillars in place, an open, resilient global financial system is possible.