It is therefore not surprising that over there, as well as over here, there is criticism of the existing structure, and pressure for change. Our own system, with its monopolistic approach to the origination of legislation, does not generate competing draft bills. But the marketplace for ideas on regulatory reform is, I can assure you, just as well contested. Critics of the existing British system object on three counts: 1  that the failures of the last decade demonstrate its inability to cope with strains and crises;  2  that it is unnecessarily complex, with overlapping and sometimes even conflicting responsibilities; and  3  that it has failed to keep pace with changes in institutional and market structures; the distinctions on which it was based no longer effectively apply. It is not my aim today to give a comprehensive assessment of the validity of all these arguments. And, in any event, just as in the US, there is a heavy political dimension to this debate. But I would make a few observations on the arguments advanced for change. The UK system is complex, although it is no more complicated than the equivalent arrangements in some other countries with similarly sophisticated financial markets. (Indeed, were I not a guest here, I might say that the US system was rather more labyrinthine than ours.) Those who argue for simplification point to duplication of function and cost, especially between the SIB and the front-line financial services regulators.

This approach, sometimes called ‘market neutrality’, has obvious attractions for central banks charged with setting monetary policy for the economy as a whole. But it has quite a striking implication for the carbon footprint of the CBPS portfolio. Chart 5 compares the proportion of the CBPS held in each sector with the contribution of that sectoral holding to the total carbon footprint of the portfolio. And you can immediately see that some sectors – notably the utilities: electricity, water and gas – contribute more to the CBPS’ carbon footprint than their portfolio share might suggest. Others by contrast contribute substantially less – eg the consumer, communications, property and finance sectors. 12  A full set of eligibility criteria can be found here: https://www.bankofengland.co.uk/markets/market-notices/2016/asset-purchasefacility-corporate-bond-purchase-scheme-market-notice-september-2016. Financial risks on the CBPS, like the Asset Purchase Facility as a whole, are indemnified by HM Treasury. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  5  Chart 5: CBPS sectoral composition and carbon footprint13  There are at least two reasons for this apparent bias. The first is that – for reasons unrelated to emissions – investment grade corporate bond issuance tends to be better suited to companies with big fixed long-term capital investment needs (and on average larger carbon footprints). By contrast, smaller companies (with on average lower carbon footprints) are more likely to rely on funding from banks or other sources. Debt issuance therefore tends to be skewed towards sectors with higher carbon footprints, relative to their shares of GDP.