. and the changes to derivatives and securities financing designed to increase transparency and reduce risk. there are, it is true, some material components of the reforms still under construction. we have an internationally agreed definition of the leverage ratio and we are implementing a leverage related capital requirement in the uk. but an international standard on such a requirement has not yet been agreed ahead of planned implementation in 2018. and there is still major construction work underway on the denominator of the risk based capital adequacy requirement – the basel committee work to update the standardised approach for those firms that do not use internal models and to review the role of internal models in the framework. this work is important ; in order to have confidence in the risk based capital regime, one has to have confidence in the denominator of the ratio as well as in the numerator. my expectation, however, is that this will not lead to a major change in the aggregate level of global bank capital requirements, as some have claimed. if we are to trust the use of internal models in the approach we need to be sure that models are only used where there is adequate data to support them. and although we will i hope have an internationally - agreed leverage, non - risk based, requirement alongside the risk - based one, we will need more constraints on modelling assumptions and inputs in order to reduce variability of capital outputs between banks to an acceptable degree. i imagine this work will lead to a redistribution of capital within bis central bankers ’ speeches the system and to changes in requirements for some institutions. but it should be seen as the working through of basel 3 not as a new regime – a basel 4. before i test whether wilde was right and turn my focus to market - based finance, i should observe that this is not because i think either that systemic risks from banking have disappeared or that the new regulatory framework is perfect in every respect. the uk banking system is much more resilient now. for example, major uk banks now have an average cet1 capital ratio of 12 %, almost twice their average capital ratio in 2008. their liquid asset buffers have trebled in size since 2008 and their short - term wholesale funding ratio has halved since 2006 ( from 24 % to 13 % ). last year ’ s stress test showed that major uk banks could withstand a very sharp increase in unemployment, an unprecedented fall in house prices and with the bank of england raising interest rates in the teeth of a recession. this year ’

the only place they can go. bail - in is just one technique for delivering that. its distinguishing characteristic is that it applies losses up front based upon a valuation rather than at the end of a liquidation of assets. as such, it prospectively avoids an unnecessary destruction of value. but there is no silver bullet. we need resolution tools that work in different contexts for different types of bank / dealer. that means having a rich set of tools but with a common trigger for going into resolution. i will say something first about the trigger, and then about different resolution tools and strategies. the trigger for resolution not a few people worry about the trigger for putting a firm into resolution – not too early, not too late. it is obviously important to get that trigger right. to my mind, the best way of thinking about it is that a firm should go into resolution when its time is up – when recovery strategies are exhausted, and the firm just will not be able to bis central bankers ’ speeches reverse its decline into insolvency or lack of viability. how to frame that thought more precisely? every country has criteria for authorising / licensing a bank. a sensible trigger for resolution would be when a bank no longer meets the criteria for being authorised and, crucially, when there is no reasonable prospect of its doing so again. that does not give a damaging degree of flexibility to the authorities ; it is a demanding test. some resolution strategies in the banking field, many resolution tools entail separating out a distressed firm into different parts. separating bad from good assets ; and separating essential from non - essential functions. the good and critical functions are sold and transferred to another bank ( often known as “ purchase & assumption ” ) ; or to a bridge bank pending such a transfer. the rump goes into administration, run down and disposal. that is achievable for relatively simple commercial banks operating in a single jurisdiction, and all of whose contracts are under the law of that jurisdiction. it is harder for so - called systemically important financial institutions ( sifis ), spanning many markets, jurisdictions, and currencies, with complex counterparty relationships. as one international colleague put it, the standard toolkit would face an “ exponentially greater challenge ”. top - down capital restructuring : bail - in that is why resolution authorities in a number of countries are exploring how to execute “ top - down ” resolutions of complex groups, employing bail - in of debt issued by the holding company or