31  9  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  9  Data and analysis are only the first steps in honouring the FSB’s commitment to G20 Leaders to address the structural vulnerabilities associated with asset management.34 Authorities and firms must implement the FSB’s recommendations for greater consistency between funds’ redemption terms and their assets and investment strategies. Funds should have the liquidity management tools to deal with stressed conditions. And these tools must be able to dampen the impact of first mover advantage on systemic risk. Given the scale and proximity of the potential risks, in the Bank of England’s view, authorities should review the adequacy both of its recommendations and their implementation sooner rather than later.35 Policymakers must be alert situations where market innovation once again introduces complexity and opacity, and excessive reliance on markets always clearing. For example, global leveraged lending is growing at rates – and has reached a scale – comparable to the subprime on the eve of the crisis.36 Underwriting criteria have loosened as rapidly,37 the requirement that managers retain a portion of their securitisations has been overturned by U.S. courts, and there is limited information on the ability of the ultimate holders of the debt to absorb losses. To be clear, there are important differences between leveraged lending and sub-prime. In particular, the banks at core of the system are significantly more resilient and have limited direct or indirect exposures.

For risks that private financial institutions cannot self-solve, the UK Government is taking forward legislation that will allow UK households and businesses to access financial services provided by EU companies. Where joint action is required, we have been working with the European Central Bank. There has been considerable progress in the UK to address these risks, but only limited progress in the EU. Timely action by EU authorities is needed to mitigate risks to financial stability, particularly those associated with derivative contracts and the transfer of personal data. Throughout the Bank’s preparations for Brexit, we have been clear that we will maintain the traditions that have underpinned the UK position as a leading international financial centre. In particular, we will maintain current levels of resilience and our commitment to openness. V. CONCLUSION 800 years of economic history teaches us that financial crises occur roughly once a decade. A frequency that reflects in part the short institutional memories in finance. Our citizens have not forgotten the last crisis. Certainly not in the UK where average real incomes are still below pre-crisis levels. Or here in the US where confidence in banks remains near historic lows. The reforms of the past decade have put in place a new financial system that could, with time, regain people’s confidence. However, the challenge for policymakers is that, when it comes to financial stability, success is an orphan. As memories fade, complacency sets in and pressure to compromise re-emerges. We all bear heavy responsibilities to safeguard recent progress and address emerging vulnerabilities.