In short, I think that the regulatory system was not conducive to adequately measuring the significant risks taken by institutions; to providing the necessary incentives for controlling them; to ensuring sufficient capacity for absorbing losses when they materialised; and, finally, to avoiding contagion to the sector and to the economic system as a whole with the subsequent adverse consequences on public finances, growth and unemployment. In response to these deficiencies, the main international authorities have agreed and, in some cases, already implemented important reforms affecting nearly all significant aspects of financial activity. Allow me today to focus on what I consider are the three pillars of global regulatory reform of the credit sector: first, measures to strengthen the solvency of banks; second, reforms to facilitate the orderly resolution of non-viable institutions; and, finally, the structural measures to set limits on credit institutions’ business model. BIS central bankers’ speeches  1  Solvency legislation Let us begin with the solvency rules. The new solvency rules, known as Basel III, introduce significant changes in prudential requirements which envisage not only an increase in the amount and quality of capital required, but also supplementary prudential oversight aimed at strengthening the resilience of banks and the financial system as a whole. This new framework has been incorporated, as you know, into European legislation through the Capital Requirements Directive and Regulation which will be implemented on 1 January 2014. Basel III includes far-reaching changes. First, it requires banks to considerably increase their loss-absorbing capacity.

Last Orders: Calling Time on LIBOR Speech given by Dave Ramsden, Deputy Governor for Markets & Banking Bank of England “Last Orders: Calling Time on LIBOR” event 5 June 2019  1  All speeches are available online at www.bankofengland.co.uk/news/speeches  Authorities, internationally, led by Andrew Bailey, have been calling time on Libor for a while. Panel banks have agreed to continue to submit to Libor until end 2021 securing its future until then, but not beyond. This event focusses on the transition to our future without Libor, and the critical point we find ourselves at today – what we refer to in the conference title as ‘last orders’ for new exposures to Libor. This is a global issue – affecting multiple currencies. However, as you may expect and consistent with the UK origins of the phrase “last orders”, I’m going to choose to focus on sterling Libor and its successor, SONIA, in my remarks today. First, before turning to that transition, a reminder of why, informed by our recent Dear CEO exercise and with 30 months to go, time is being called on Libor. Libor prices in fluctuations in the perceived credit quality of banks, whereas for many users, alternative risk free reference rates are better reflections of the general level of interest rates. Beyond this, although Libor’s methodology and governance has been reformed and improved, an underlying issue remains – the way banks fund themselves has changed. There are very few transactions in the markets that Libor purports to measure.