the banking system. your balance sheets have to be resilient too. over - gearing of your industry has been a major driver of instability in the past, making you vulnerable to the slightest change in sentiment. in part that ’ s the result of lenders offering deals in the good times that present even the most responsible investors with an impossible choice : gear up to uncomfortable levels or be forced out of the market. to avoid that hobson ’ s choice, any slipping of lenders ’ standards has to be addressed. that ’ s why we ’ re now reviewing the standards of major lenders regularly. carney m ( 2014 ) “ the future of financial reform ”, presented at a monetary authority of singapore lecture, november 17, 2014. bis central bankers ’ speeches this year we found loan - to - value ratios rising and interest cover ratios falling, but from a very conservative starting point. we ’ ll keep watching this, and there will be a new survey in coming months. we know that the importance of major uk lenders in financing you has almost halved since the crisis. while that diversity should be welcome – it should be a source of strength – it can be a source of weakness if it simply moves gearing into a shadow on our radar screen. it ’ s essential that our radar technology keeps up. the bank ’ s commercial property forum, ably chaired by ian marcus, helps us minimise the shadow on the screen. but we also want systematic data. that ’ s why i welcome the efforts of your industry, in partnership with us, to build a database of cre loans : a dataset that will be run and managed for the public good, while respecting commercial confidentiality. it can give you, and us, the information we need to manage the risk of loosening underwriting standards. long - term valuations but still more is needed to nurture a resilient market environment. you can become overgeared without technical slipping of underwriting standards. we ’ ve seen in the past how a change in sentiment can drive commercial property prices up even without the prospect of improvement in the cashflows which the property will generate. that creates headroom for those already in the market to borrow more without breaching their loan - to - value standards. and the use of that headroom drives prices up further. an ultimately pernicious spiral of sentiment and debt begins. valuations and debt increase sharply relative to the cashflows that support them

uk private equity industry accounting for over 50 % of the total european market. the drivers of the city ’ s recent growth in part the city ’ s recent growth reflects – as it did a century ago – a rapid growth in international trade and financial liberalisation. globalisation has brought an expansion of world imports by 180 % since 1990 compared with an 80 % increase in world gdp. progressive upgradings of a number of emerging economies have broadened and deepened international links. higher savings in the emerging asian economies, in particular, have combined with demographic change in the west to increase demand for long - term savings instruments and a fall in their yields. 10 all these trends taken together have led to a period since 2002 of unusually high returns for holders of many financial assets and the explosive growth in new products and markets. but what is driving the growth of london in particular? one approach to this question is to ask executives in major financial companies, both in the uk and abroad, why they choose to locate business here. a number of these surveys have been conducted recently and they show several common factors. 11 london benefits from english as an international language of commerce, and from its time zone, which means the working day overlaps with asia in the morning and america in the afternoon. london also has well established financial infrastructure and telecommunication networks. many of those surveyed point to the regulatory and legal environment. this is partly a matter of the regulatory style – the “ risk based and proportionate ” approach that the financial services authority has adopted based on general principles where possible. it is partly the simplicity of dealing with a single regulator. caballero, r. “ on the macroeconomics of asset shortages ” nber wp 12753, december 2006. for example, cook, g. a. s., pandit, n. r., beaverstock, j. v., taylor, p. j. and pain, k. ( forthcoming in 2007 ). “ the role of location in knowledge creation and diffusion : evidence of centripetal and centrifugal forces in the city of london financial services agglomeration ”. environment and planning a. english law, which is also the basis for financial services law in the united states, prevails here, with the added advantage that practitioners are less likely actually to invoke the legal system. and what has been called the wimbledonisation of the uk financial markets – the sale of nearly all the british merchant banks and stockbrokers and