european centres in paris and frankfurt and, within the uk, in edinburgh for instance. but london is estimated to have 75 % of uk's wholesale financial jobs and to be the largest european centre for wholesale finance with 35 % of the jobs ( up from 30 % in 2000 ). so by this measure those working in “ city ” represent a little more than 1 % of the uk workforce. while this is estimated to be twice the equivalent proportion for germany and three times that of france, we should not get it out of perspective. the economic geography of financial centres geographical concentrations, clusters, are common in many industries. in some cases they reflect the availability of raw materials or power sources. elsewhere the underlying reasons are not so obvious. watch making in switzerland, films in hollywood, the high - tech sector of silicon valley are all classic examples. but the pattern of geographical hubs is particularly prominent in the financial industry. in most countries, one city has tended to become predominant even if cities such as chicago and edinburgh have developed important niches in particular financial services. over time some of these have become hubs for international finance like new york in the us, zurich in switzerland, hong kong and singapore in asia and, of course, london in the uk. the history of each centre has been shaped by a myriad of factors from empire, the role of guilds, and the proximity of kings and governments. but a number of economic forces have also been at work and are still reinforcing the pattern. 5 first, there are great advantages for both firms and workers from operating in a market with a deep pool of labour with the right skills. workers know that if their firms fail or shrink they can easily find another job ; firms can easily acquire new workers to start up or expand. second, firms which have expertise in supplying the main industry become established close to the cluster so new front - line firms find the inputs they need on the spot. the 37, 000 strong membership of the london society of accountants is a good example of this. third, where specialist firms and highly skilled workers are grouped together the transfer of skills and information can be quicker. knowledge and information pass between workers in different firms, formally and informally, as they trade with each other, so innovation is encouraged and productivity improves. fourth, clustering tends to promote both competition and cooperation. clusters tend therefore to increase productivity, drive innovation and stimulate the formation of new business. in these ways the clustering helps to create and reinforce

the financial crisis has been stress testing – it is critical, and needs to be thorough and cannot be sidelined when the consequences may be awkward. but, there are some difficult issues surrounding how to set the parameters of stress tests – how much stress to assume? we tend to calibrate stress tests on the basis of history plus something, but the something can be hard to judge. as a case in point, this is what we did in the fpc's work on liability driven investment after 2018. now, we know that this sort of approach does not pass the black swan test, one in which the future is not implied by the past and thus not forecastable. on its own a stress test is very useful and an essential part of the toolkit. but we know that we cannot envisage and design tests that capture all possible future states of the world, and we should not pretend that we can. instead, we must stress up to the point where it is sensible for regulation to create the protection we want, and – this is crucial – we must have other approaches that cover the world of risks beyond that point. these approaches are bank resolution tools, and central bank intervention tools of the type we had to use last autumn. you will be mightily relieved to hear that we are into the home straight now, but it contains the small issue of non - bank finance. given the increase in bank regulation required in the aftermath of the financial crisis, it is not surprising that the last decade has seen a relative and absolute increase in non - bank finance. continuing the theme developed earlier, one important way to look at the bank versus non - bank world is that in the former there is assurance on the value of money as the main liability of banks, while in the latter the value of investments explicitly and deliberately is not assured. this is important, but we also have to recognise that the growth of non - bank finance has led to the significant expansion of the landscape of systemic risk since the crisis. in other words, we have seen that the non - bank world can transmit risk into the bank world, and other parts of the core of the financial system, like central counterparties. consequently, the relative focus of our financial stability work has shifted to the risks posed by non - bank financial institutions ( nbfis ). moreover, we have seen a common theme running through incidents that have occurred – the dash for cash in 2020, the archegos collapse, the ldi pension