disrupting market functioning. in other words, they compromised market resilience. those risks have been addressed. but we must stay alert to any possible new bergs of the future. to spot them emerging we need to dive into the detail of the system, to look at the incentives and constraints facing the participants. all speeches are available online at www. bankofengland. co. uk / speeches we ’ ll don our diving equipment later. before we do, it ’ s worth asking who should care about hidden risk? any manager focussed on risk and return will be interested in these bears and bergs. failure to acknowledge them can damage performance. but while the risks mean some investors can have a bad day and others a good one, the ups and downs of asset markets don ’ t necessarily concern policymakers. our focus is on the macro prudential ; on ensuring the financial system serves the wider economy in bad times as well as good. and risks in markets do not translate automatically into risks to that. so our objective is not to protect investors from ups and downs in financial markets or to target some level for asset prices. the objective is to protect the wider economy from disruption if market risks materialise. the nature of corporate finance has shifted decisively in the past decade. since the crisis, nearly all of the increase in debt of companies in the uk can be accounted for by bond issuance. the scale of business borrowing through markets is now on a par with their borrowing from banks. this shift in the balance of corporate finance should be positive for stability. a more diverse system can be a safer system. bond finance has been the spare tyre that kept credit flowing while the banking system was punctured after the crisis. so these markets are clearly delivering for the economy. but conditions could develop in which they have the potential to disrupt : 1 if debt levels of companies, particularly banks, were to come to rely on stretched credit markets and those markets were then to adjust. or if credit markets were to prove lacking in resilience so that they amplified any market adjustment, driving overshooting and tightening conditions for businesses. the circumstances in which financial markets can affect the real economy were covered in my speech : ‘ market finance and financial stability : will the stretch cause a strain? ’ ( february 2018 ). all speeches are available online at www. bankofengland. co. uk / speeches so as we consider the bear of stretched valuations in credit markets and the berg

international bonds. and more international banking activity is booked here than anywhere else. bank of england survey results. bank of england survey results. respondents were asked for their views on the statement ‘ i believe that financial markets work in the interest of society ’. possible responses were : strongly agree, agree, neutral, disagree, strongly disagree. see the fsb chair ’ s letter to g20 leaders, available at http : / / www. financialstabilityboard. org / 2015 / 11 / financial - reforms - achieving - and - sustaining - resilience - for - all /. bis central bankers ’ speeches great strides have been made in making the system more resilient. the banks that sit at the centre of many markets are safer, with capital requirements that have increased ten - fold and liquid assets on balance sheets that have risen four ‐ fold. a new, simple leverage ratio requirement protects the system from risks that we think are low but in fact are not. banks ’ trading assets have fallen by a third since the crisis, and their interbank borrowings have been cut by almost a half. banks ’ newfound resilience has been demonstrated recently, as they have dampened – rather than amplified – short - lived but significant financial market volatility. and those banks must be resilient because they can no longer rely on the support of the state. this week the financial stability board proposed to g20 leaders a landmark agreement on the total loss absorbing capacity which is central to ending too big to fail in the banking system. once implemented, it will ensure that large financial institutions can fail without disrupting the financial system or calling on taxpayers to bail them out. the era of heads - i - win ; tails - you - lose capitalism is drawing to a close. complex webs of derivatives are being simplified and made safer. we are also working to turn the tide of ethical drift. market benchmarks have been reformed to end abuse. most importantly, market participants are being made accountable for their actions. misconduct will be met with genuine penalties. by holding individuals accountable, authorities are ending the age of irresponsibility. the best in industry are playing a leading role, for example, by getting the ficc markets standards board up and running. the board will establish clearly understood standards, keep them up - to - date with market developments and promote adherence. in parallel, the banking standards board is promoting higher standards of conduct and competence across the uk banking sector. to give these measures teeth