war financial liberalisation, this was seen as a “ puzzle ” ( feldstein and horioka ( 1980 ) ). yet at precisely that point, the puzzle began to unravel. correlations between national saving and investment began falling. by 2007, they had reached zero – bliss point for global capital market integration. yet bliss was short - lived. 2007 proved to be a high - water mark. the onset of the financial crisis has resulted in significant capital market retrenchment as nation states have returned money home, placed regulatory ring - fences around assets and imposed restrictions on capital movement. today, global capital market integration is back to levels last seen in 2000 and is still falling. this retrenchment reflects nervousness about the dark side of globalisation, its fragility and contagious cost. and this nervousness is not confined to capital flows ; it has affected flows of goods, services and people too. that is why the world trade organisation ’ s ( wto ) latest round of negotiations has been on - going for nearly 12 years. and it is why policy debates about immigration restrictions in a great many advanced economies are so vexed. these are attempts to turn the tide or at least stem the flood. the costs of a significant retreat in flows of capital, goods, services and people are difficult to quantify. they are not, however, difficult to imagine. we need only look back to the aftermath of the first world war for a case study. then, trade barriers were erected, capital flows restricted, immigration controls imposed. what followed was not a halcyon period for the global social, economic and financial order. bis central bankers ’ speeches reversing the rising tide of information would be an even more canute - like task. while the library at alexandria succumbed to fire, it is difficult to see the clouds suffering the same fate. ending quarterly reporting will not bring an end of quarterly capitalism. the flood of information seems set to continue to rise, our cognitive in - box overflowing, our brains rewiring. that begs the question of whether there is another public policy path better able to tackle fat tails and short minds. there may be. it is both an old path and a new path. along it lie institutions – “ humanly devised constraints that structure political, economic and social interactions ” ( north ( 1991 ) ). so defined, institutions have long been recognised as key ingredients of stability and growth. in adam smith ’

as a quarter of world trade and produced around a tenth of global gdp. today, those shares have both fallen under 5 %. for details on how the historical estimates are calculated, see ‘ the uk at the heart of a renewed globalisation ’, speech given by mark carney, 24 october 2013, available at http : / / www. bankofengland. co. uk / publications / documents / speeches / 2013 / speech690. pdf. all speeches are available online at www. bankofengland. co. uk / speeches the resulting cost to our citizens has been tremendous. over the past decade, uk average real earnings th have fallen for the first time since the middle of the 19 century. trust in the financial system has plummeted. over the past decade, the uk and its key g20 partners have been fixing these fault lines and creating a system that is safer, simpler and fairer. the system is safer because banks are now much more resilient, with capital requirements for the largest global banks that are ten times higher than before the crisis and a new leverage ratio that guards against risks that may seem low but prove not. the financial system is simpler. as banks have become less complex and more focused, they are lending more to households and businesses and less to each other. a series of measures are eliminating toxic and fragile forms of shadow banking while reinforcing the best of resilient market - based finance. and more durable market infrastructure is simplifying the previously complex – and dangerous – web of exposures in derivative markets. the financial system is fairer because of reforms that are ending the era of “ too big to fail ” banks and addressing the root causes of a torrent of misconduct. the benefits of these painstaking efforts are beginning to be realised. the global financial system is moving from fragility to resilience. the too - big - to - fail public subsidy enjoyed by private systemic banks has fallen by 90 % in the uk. credit is now growing in all major economies. sources of finance are increasingly diversified between banks and markets, helping to keep the cost of finance low. and the system is demonstrating an ability to dampen shocks rather than amplify them. despite this transformation, there are nascent risks that, if left unchecked, could reverse the progress made and ultimately undermine the g20 ’ s objective of strong, stable and balanced growth. indeed, the global financial system is at a fork in the