– it must be right that we exempt small firms from bail - in debt, but this inevitably leads to a moment when successful firms stop being small and need to start issuing. second, and related to the first, although we have in my view been pretty successful in encouraging new entrants, it is so far notable that no small bank has successfully become a large bank. perhaps this will change through time, and it may have much more to do with behavioural stickiness of current accounts than regulation, but it would be complacent to be relaxed about it. as an aside, there may be lessons to be learned here from the general insurance market : it is notable that some of today ’ s largest gi firms started as small challengers within the last 20 - 30 years. of course one way firms can get larger is through mergers and acquisitions, for which pra approval of the ‘ change in control ’ is required. a natural question to ask is how our secondary competition objective plays into these situations. the law is actually very clear on this point : when considering whether to approve the change in control, we are required to disregard the competitive impact and to limit ourselves to a consideration of the appropriateness of the new controller. assessing the impact on competition falls instead to the cma. third, there is a tension for us arising from the efforts we make to encourage new and smaller players. my involvement in this line of work really began with the collapse of the largest, and apparently well - diversified, bank in the world right here in the uk. and i have been involved in and observed numerous other episodes of big banks getting into trouble. so i will never believe that there is something inherently safer about larger banks. but nor do i believe the opposite, and there are plenty of examples of smaller banks getting into all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx trouble, in some of which i ’ ve been heavily involved. so it is perfectly natural that with our safety and soundness objective in mind we should take a close interest in small firms as well as large, particularly when they are fast - growing, heavy users of central bank funding schemes, concentrated in higher - risk niches and / or untested in a downturn. bluntly i think we wouldn ’ t be doing our job if we didn ’ t do this – but at the same time the competition objective requires us to ride

both horses at once. this is doable but it is tricky. it also raises an interesting question about the relative costs of supervising smaller firms versus higher fscs levies to cover failures, which would merit further study. fourth, how is technology going to affect all this? this is obviously a huge topic in its own right, and others here will touch on it so i will make only two brief comments. one, in my view the jury is still out on whether open banking and / or psd2 are the gateway to a bigger change. two, it is notable that some digital banks are making material inroads into the current account market – is this the leading edge of a bigger change, or not? fifth, might brexit create opportunities to move further on proportionality for smaller firms? i ’ ve already talked about the way in which we make the regime tougher for larger firms. this is entirely appropriate, but is not the same as saying we should have a weak prudential regime for smaller firms – indeed, i think that is the last thing we need both from a safety and soundness and a competition perspective. however, there may be a reasonable case that a simpler ( simpler, not weaker ) regime for small firms would advance both our safety and soundness and competition objectives. we have often argued in europe for simpler approaches for small firms, but the differing legal traditions across the eu27 and the desire to harmonise regulation and supervision are powerful forces in the opposite direction. it is impossible to know at this stage, but under some brexit outcomes we might have room to revisit this question for small domestic firms. it is notable that both switzerland and the u. s. are taking quite radical steps in this area ; while i am cautious about the leverage - ratio - only capital regimes they are working on, and small british firms might be cautious about a 9 % leverage ratio requirement, we are taking a close interest. sixth, there is the debate – which came up most recently in the context of the treasury select committee ’ s inquiry into solvency ii – about whether our competition objective would be better cast as a primary objective. i have a number of reservations about this idea. one is purely practical : with the fca and cma already having primary competition objectives, do we really want a third regulator doing this for the financial services sector? it strikes me as a recipe for bureaucratic overlap. another is that the sort of referee role the