and standardising terms in vanilla instruments, beyond the dealer community in some circumstances. the debate is not just about clearing houses and post - trade infrastructure. the financial community must also be open to more trading in core, vanilla markets going via exchanges or other well - designed and open trading platforms. if well constructed, that could help to preserve liquidity when times are tough. we would, for example, like to see serious consideration of whether the corporate bond markets could benefit through something along those lines. bank capital instruments the insurance industry is involved, one way or another, in everything i have touched on this morning. but there is one other area – as investors in bank capital instruments. i am therefore sure you understand that the authorities, internationally, cannot avoid reviewing what should count in the medium term as regulatory capital for banks. it won ’ t do for banks to be able to leverage up on subordinated debt ( or other forms of hybrid capital ) if, just when it matters, the holders do not suffer because the authorities cannot let the banks concerned be liquidated without bringing system collapse down on us all. we either need a system where banks of any type can quietly fail and hybrid capital is actually useful in protecting the deposit insurer ; or, more realistically, we shall need a much narrower definition of capital. only equity can absorb losses and sustain a going concern. finding a way through that in the current crisis remains a challenge. one helpful step might be for the investment industry to seek out opportunities to convert subordinated debt into equity ; or, at a discount, into senior unsecured debt, as has occurred in a few instances already. it would probably entail a haircut, but i wouldn ’ t air it unless i thought it could be in your collective and medium - term interests as investors in our economy and the system of credit that supports and lubricates it. the new special resolution regime for banks may create healthy incentives in that broad direction. in concluding, can i thank you again for inviting me to join you today. authorities everywhere are having to innovate to help get us through this crisis. and we will need to innovate to build a better system for tomorrow. our dialogue with you can only help that. we are very grateful for it.

off, there certainly has been ) some erosion of the banks ’ market share as a repository for liquid asset holdings, that erosion has generally been very gradual. in the uk, for example, bank ( and building society ) deposits still account for 42 % of personal sector liquid asset holdings against 50 % a decade ago ; the proportion would be very much higher if liquid assets included only those that are capital certain. and the vast bulk of the banks ’ liabilities remain in the form of unsecured, short - term, deposits. despite the rapid development of ( secured ) repo markets, only some 3 % of the major uk banks ’ funding ( in sterling and foreign currency together ) was secured ( from information provided last autumn ) through repo ; and the figure for all uk banks, including the business conducted in branches and subsidiaries of overseas banks, which have less direct access to deposits, was only around 8½ %. the proportion of secured funding is below 5 % for other major internationally active banks that we have looked at, with the exception of jp morgan and bankers trust - both somewhat special cases - where the proportion is very much higher ( 25 - 35 % ). and even in those special cases it is still well below that for the major us securities firms ( typically 55 - 80 % ). banks remain, too, at the heart of payments systems. payments may be made directly across bank accounts through instructions, for example, in the form of cheque or debit card ; or they may be made indirectly, through, for example, the use of credit cards, the balances on which are subsequently settled using a bank account. even where disintermediation creates new chequing facilities, as for example, in the case of money - market mutuals, these are still cleared through settlement banks. it is true that new forms of money transmission - e - money are being developed, sometimes outside the conventional banking system. but i suspect that they, too, will typically depend upon clearing through the banking system. to the extent that they come to involve the creation of what are effectively direct deposits, they will represent banking in a different form and become special, and logically subject to regulation, in much the same way as conventional bank deposits. in the payments system context, too, important progress is being made to reduce inter - bank exposures ( through the introduction of real time gross settlements systems in many countries, for example, and through the netting of foreign exchange settlements ) but