hard earned savings of millions of people, and use these funds for private gain is a privilege conferred by society on a bank, which merits exemplary professional and ethical behaviour. moral and ethical highground : trust and respect 4. returning to the theme of the summit “ regaining the moral and ethical highground ” – what do we really mean here? i think, in a word, “ trust ”. with “ trust ”, comes “ respect ”. 5. in the past, banking was regarded as a reputable profession and bankers were highly trusted and respected both by their customers and by members of the public more generally. this was not surprising as basically customers entrusted their life savings to their bankers and the preservation and safety of their hard - earned money was in the hands of those bankers. although nowadays customers still place their life savings with banks, bankers no longer enjoy the same high degree of trust and respect from society, especially after the global financial crisis. what has changed so dramatically to bring the reputation of bankers so low? ft. com – march 12, 2009 “ welch condemns share price focus ”. bis central bankers ’ speeches change in modality and governance structure of banking 6. well, the modality and governance structure of banking have changed a great deal over the last century. more importantly, these changes have created an incentive system that leads to a misalignment and disconnect between the interests of the owners of banks ( i. e. the shareholders ), bank management and customers. 7. not so very long ago, banking was a business conducted by individuals, families and ( more latterly ) private partnerships, where the owners and managers of banks had ample “ skin in the game ”. they stood to lose not only their investments in the banks but also their entire family wealth or, in some more extreme cases, even their liberty, should their actions, or the actions of their partners, result in the failure of their bank. this naturally served to temper the degree of exuberant risk - taking. partners or managers in a bank were in for the long haul, with their investments and family wealth tied into the firm until retirement. so it was not just their next year ’ s bonus that was at risk. this evident “ alignment of interest ” between the bank owners or managers and the bank ’ s customers and creditors clearly helped promote trust. 8. that said, although some us investment banks only moved from the partnership to public ownership model in the past 25 years, it is

think the opposite, and uk public opinion is equivocal. 25 the nascent fourth industrial revolution may ( for a time ) harden such concerns. and third, globalisation leads to imbalances of democracy and sovereignty, leading many to lament a loss of control and to lose trust in the system. as dani rodrik has argued, there is a trilemma between economic integration, democracy and sovereignty. 26 common rules and standards are required for trade in goods, services and capital, but those rules cede or, at best pool, sovereignty. to maintain legitimacy, the process of agreeing those standards needs to be rooted in democratic accountability. much will be required to create a more inclusive, sustainable globalisation but part of the solution is a more flexible and open trading system for services and for small and medium enterprises ( smes ). freer trade in services can help to resolve external imbalances. 27 with barriers to services trade currently up to three times higher than those for goods, the bank estimates that eliminating this differential could reduce the excess deficits of the us by up to one third and of the uk by up to one half. freer trade for smes and services would spread the benefits of global markets much more widely than traditional, more multinational - based free trade in goods. smes employ 60 % of workers. more women work in services than men. the digital revolution28 could help to ensure trade is available to the smallest companies as well as the largest. and freer trade in services could help rebalance the trilemma from prescriptive supranational rules to more differentiated, national approaches to achieve common outcomes. the post - crisis reforms of financial services offer a model. the g20 has agreed a wide range of regulatory standards and put in place the mechanisms for deep supervisory cooperation. these financial stability board ( fsb ) reforms create a platform for cross border financial services between different legal systems and regulatory approaches that achieve similar outcomes for financial stability. this avoids unnecessary see carney, m ( 2016 ), ‘ the spectre of monetarism ’. rodrik, d. ( 2011 ). the globalization paradox : democracy and the future of the world economy. see carney, m ( 2017 ), ‘ a fine balance ’. sales are increasingly taking place on - line and over platforms, rather than on the high street. intangible capital is now more important than physical capital. a hyper - connected, capital - light world