finance, vol. 37 ( 8 ), pages 2879 - 2892. barth, j r, caprio, g and levine, r ( 2013 ), ‘ bank regulation and supervision in 180 countries from 1999 to 2011 ’, nber working paper 18733. ben - david, i, cerulli, g, fiordelisi, f, and marquez - ibanez, d ( 2018 ), ‘ seeking my supervisor : evidence from the centralization of banking supervision in europe ’, mimeo. bodea, c and hicks, r ( 2015 ), ‘ price stability and central bank independence : discipline, credibility, and democratic institutions ’, international organization, vol. 69 ( 1 ), pages 35 - 61. dagher, j ( 2018 ), ‘ regulatory cycles : revisiting the political economy of financial crises ’, imf working paper wp / 18 / 8 dincer, n n and eichengreen, b ( 2012 ), ‘ the architecture and governance of financial supervision : sources and implications ’, international finance, vol. 15 ( 3 ), pages 309 - 25. fraccaroli, n, sowerbutts, r, and whitworth, a ( 2019 ), ‘ does regulatory and supervisory independence affect financial stability ’, forthcoming. garriga, a c ( 2016 ), ‘ central bank independence in the world : a new data set ’, international interactions, vol. 42 ( 5 ), pages 849 - 68. klomp, j and de haan, j ( 2009 ), ‘ political institutions and economic volatility ’, journal of financial stability, vol. 5 ( 4 ), pages 311 - 26. all speeches are available online at www. bankofengland. co. uk / news / speeches oecd ( 2016 ), being an independent regulator, oecd publishing. quintyn, m, and taylor, m w ( 2002 ), ‘ regulatory and supervisory independence and financial stability ’, imf working paper wp / 02 / 46. all speeches are available online at www. bankofengland. co. uk / news / speeches

does this leave us? the recapitalisation plan is having a major impact on the restoration of market confidence in banks. perhaps the single most important diagnostic statistic is the credit default swap premium – an indicator of market concerns about solvency of banks. these premia have fallen markedly since the announcement of the uk plan. from the close of business on 7 october to now the premia on the uk ’ s five largest banks have more than halved. we are far from the end of the road back to stability, but the plan to recapitalise our banking system, both here and abroad, will i believe come to be seen as the moment in the banking crisis of the past year when we turned the corner. as concerns about the viability of our banks recede, banks should regain the confidence of the market as recipients of funding. there are already some signs of greater activity. but the age of innocence – when banks lent to each other unsecured for three months or longer at only a small premium to expected policy rates – will not quickly, if ever, return. in itself that does not affect the ability of banks to fund lending, but confidence has been badly shaken after the traumatic events of the past few weeks. new sources of funding will develop only slowly, although the temporary government guarantees of new lending to banks will help. so it will take time before the recapitalisation leads to a resumption of normal levels of lending by the banking system to the real economy. and we cannot assume that there will not be problems in other parts of the financial system and in some emerging market economies to be overcome before the crisis can truly be described as over. with the plan for recapitalisation in place, the focus of attention has moved to the outlook for the uk and world economies. over the past month, the economic news has probably been the worst in such a short period for a very considerable time. the most recent activity indicators for the second of half of the year have fallen sharply. in the uk, unemployment continues to rise and, over the past three months, has risen at the fastest rate for seventeen years, albeit from a relatively low level. house prices declined by about 5 % in the third quarter and are 13 % lower than a year ago. the recent weakness of the housing market is likely to continue. and if the news on the domestic front were not sufficiently discouraging, the rest of the world economy also appears to be slowing rapidly.