to gdp, the uk is substantially larger than the us. uk banking sector assets have risen from around 100 % of gdp to around 450 % over the last 40 years – the corresponding figure for the us stands at around 70 % 1. not only that, but overseas banks comprise almost half of those banking assets in the uk 2. in comparison, us overseas banking assets as a share of total banking assets are around a fifth 3. that means that the uk has three times as many assets from overseas banks as a share of gdp as does the us from all banks operating there. in addition we supervise in the uk more than a third as many assets from us banks as do us regulators from us banks operating in the us. furthermore we have almost twice as much international banking activity booked in the uk as anywhere else. understanding the benefits and risks of international banking matters a lot to us. we also have a unique perspective given the range and nature of business undertaken in the uk. we are host to the largest investment banks, and to global capital markets trading activities in particular. this makes us and the us one of the most interconnected countries in the global financial system. given the inter connectedness and potential complexity of the uk ’ s part of the financial system, its health undoubtedly matters a lot for global financial stability. but in addition we are host also to a great many firms which are neither focused on the domestic uk economy nor are they globally systemically important. these banks instead use the uk as a base for wholesale banking activity and trade finance whether their roots are in europe, the middle east, africa, asia or the americas. this degree of interconnectivity between the uk and the rest of the world is such that the imf noted in 2011 that, “ the stability and efficiency of the uk financial system is a global public good due to potential spillovers and thus requires the highest quality of supervision and regulation ” 4. as a major host to international financial services activity, we are highly attuned to the importance of international trade and international banking to a successful world economy. openness and trade support economic dynamism through many different channels. they promote efficient allocation of capital and risk, support greater competition, utilise comparative advantage, expand the size of the global market, and build economies of scale. why is the uk banking system so big and is that a problem? ; bush, knott, & peacock ; bank of england quarterly bulletin 2014 q4. prudential regulation

mervyn king : monetary policy developments speech by mr mervyn king, governor of the bank of england, to the cbi dinner, manchester, 20 january 2005. * * * now that the christmas celebrations are over, and the decorations have been taken down, it is time for a much - loved new year tradition - speculating on how much we all spent over the christmas period. with over 200 coaches bringing shoppers from all round the country to the trafford centre over the weekend before christmas, new trafford seems to be as popular and entertaining as old trafford. tonight, though, i want to look beyond the immediate prospect for consumer spending and ask whether the level of saving in this country is adequate to provide for our future needs. but, first, a few words on the immediate outlook. tomorrow the ons will publish its first estimate of retail sales in december. among the more lurid headlines reporting sales over the holiday period was “ retail festive slump ”, followed shortly by reports of “ record levels of sales ”. to interpret the experience of a few retailers - whether positive or negative - as a national trend is highly misleading. of course, exactly the same happens each year. last year newspapers reported “ confirmation of a disastrous christmas ” and “ shoppers played scrooge in december ”. a week later the ons said that the volume of retail sales in december rose at a rate more than double the increase expected by city economists, and the headlines became “ spending spree signals rate rise ”. the most important lesson from past experience is that, whatever the number turns out to be, it is foolish to put much weight on any one month ’ s figure, especially at christmas. there are two reasons for being particularly careful about the interpretation of data for retail sales in december. first, the figure that will be published by the ons tomorrow will be dwarfed by the seasonal adjustment that is applied to the recorded data. that adjustment changes from year to year, often leading to revisions of the figures for earlier years. typically retail sales in december are around 20 % higher than in november. so even small errors in the estimate of the seasonal pattern of sales imply large errors in the estimate of the seasonally adjusted figure. as a result the monthly data can be volatile and little economic significance should be attached to the number for any one month. second, retail sales are only part of household spending, around 40 % or so. it is quite possible, indeed likely, that spending on services,