renminbi is a global good, consistent with london ’ s historic role. but rest assured that the bank will act in a manner consistent with our domestic responsibilities. as my colleague andrew bailey said last week, our risk appetite for foreign branches will largely be determined by whether their activities in the uk are covered by credible recovery and resolution plans. 15 as always, renewing globalisation and building resilience go hand in hand. 5. conclusion after perhaps the worst financial crisis in the ft ’ s long lifetime, it is reasonable to expect financial services will again grow in importance. the process of financial deepening in emerging markets is only beginning. in europe, there is a strong case for greater reliance on robust financial markets relative to weakened banks. the uk stands to benefit because of london ’ s place at the heart of the global financial system. properly structured, this creates investment opportunities for british savers, reinforces trading ties for uk firms and improves access to credit for the real economy see the fsb ’ s “ policy framework for strengthening oversight and regulation of shadow banking entities ”, http : / / www. financialstabilityboard. org / publications / r _ 130829c. htm. nevertheless, there can sometimes be a case for such action, and the bank will be considering what it should stand ready to do and in what circumstances. clearly the bank should not support any market that would otherwise be unviable. but we have, for example, intervened in the corporate bond market, buying and selling bonds to maintain the market during the crisis until it again became self - sustaining. see http : / / www. bankofengland. co. uk / publications / pages / speeches / 2013 / 687. aspx. bis central bankers ’ speeches across this country. london ’ s international markets in turn provide a valuable service to the global economy. these benefits, on both sides, will be greatest as part of an open, integrated global financial system. the bank of england ’ s task is to ensure that the uk can host a large and expanding financial sector in a way that promotes financial stability. only then can it be both a global good and a national asset. to those ends, we are working to complete the jobs of making banks more resilient and tackling too big to fail. we are making markets more robust in order to turn the shadow banking system from a source of risk to a pillar of resilience. and we are changing how we

to achieve them is by establishing a stable financial system. of course, there are judgements to be made on what constitutes financial stability, but those are not judgements that should be a product of murky compromises with other objectives. the assessment of the failures of monetary policy in the 1970s should stand as a clear guide as to why we must establish a strong understanding of financial stability as the driving public policy objective for the financial system. the absence of a consensus for low inflation in the 1970s as an objective of public policy led to – and i will tell you the source of this assessment at the end – policy making which lacked the courage and conviction to do what was needed to achieve an objective which in itself was not always accepted as necessary. policymakers did not persist with actions when criticised ( criticism will of course happen ), they tended to give too much weight to perceived political constraints and too little weight to the cost of failure to achieve the objective of policy. they talked tough, but didn ’ t match their words with bis central bankers ’ speeches actions, and their actions in response to criticism tended to be of the “ do something ” variety. and the result was? a policymaking process and institutions with low credibility in the eyes of the public, a very dangerous place to be. now, i haven ’ t made this up, you can read it in one of the best accounts of the failings of monetary policy in the 1970s, the history of the federal reserve by allan meltzer. the reason for drawing this point out is that if the reforms are to work, we must have a clear consensus that financial stability is a goal which will enable other things that improve the welfare of the public to be achieved more easily. so, what does this mean for important aspects of the regulation of the financial system? for microprudential supervision, the proposal is based on the so - called twin peaks model which separates prudential supervision ( one peak, to be in the pra ) from conduct of business and consumer and investor protection ( the other peak, to be in the consumer and markets authority ). one of the very important features of this approach is that it doesn ’ t mean one peak is less important than the other, that is not a consequence of financial stability being a necessary condition for good conduct of business. rather, it should enable each regulatory body to be focussed on its own objective, because it requires different skills and experience to undertake the two peaks. of course, great attention