y2k. as we know now, the world ’ s financial markets survived the dreaded millennium bug, thanks in large part to the efforts of very many of you, and your it colleagues, in making sure that we would. and we at the bank like to think we played our part too. now i am not one of those who feel that all our work, yours and ours, was unnecessary. if i had to choose a motto for a central banker, i think “ better safe than sorry ” would be very high on the list! more importantly we collectively showed that the london markets were equal to the challenge - even a once - in - a - millennium challenge - and were determined to make sure that come the first day of the new year london would be “ open for business as usual ”. what of the coming year? well, i can predict that, after two years of new year working, we will all be able to enjoy our new year ’ s day bank holiday for a change next year! but beyond that, my crystal ball is no better than yours, and i am afraid that if you are looking for me to predict the course of exchange rates or interest rates over the next 12 months i am going to disappoint you. i would like instead to pick out a few themes which i think will be of increasing importance as the year unfolds. firstly, i think we will increasingly see a fall in the absolute size of government bond markets, although once again japan remains the exception. this is already happening here in the uk and in the us, as fiscal surpluses reduce bond issuance, and as the recovery in the rest of europe continues budgets will increasingly move towards balance there too. one side effect of this is of course that outstanding government bonds can become very much sought after, and nowhere is this more true at the moment than in our own market. but i think a much more significant change will be to encourage corporate issuers to take up the slack, as it were, and fill the resulting hole. europe does not yet have a corporate bond market to compare with the us market, but i think the current situation in the markets, with reduced government issuance, the opportunities afforded by monetary union and growth of the private pension industry in continental europe, all combine to provide a very promising environment for the establishment of a genuine european corporate bond market. secondly, the electronic revolution will continue to gather pace. there are those who wonder if all the hype

: / / www. slideshare. net / edelmaninsights / 2016edelman - trust - barometer - financial - services - results. for more details, see ipsos - mori veracity index 2015. for more details, see chartered institute for securities & investment ( cisi ) news release ‘ bankers pessimistic about culture change … ’ ( february, 2016 ). financial ombudsmen service. for more ombudsman. org. uk / publications / complaints - data. html. for example, bloom et al ( 2012 ), guiso et al ( 2015 ). for example, knack and keefer ( 1997 ), la porta et al ( 1997 ) and boulila et al ( 2006 ). guiso et al ( 2008 ) and zingales ( 2015 ). information please see http : / / www. financial - bis central bankers ’ speeches and protracted erosion of social capital. it puts finance on notice for losing its social licence. and, unaddressed, that jeopardises future wealth and well - being. the trust problem if this trust in finance problem is to be tackled, it needs first to be understood. why trust is important, and what determines it, are issues that have occupied the world ’ s greatest minds for centuries, perhaps millennia. the philosopher baroness o ’ neill from cambridge university often draws an important distinction between “ trust ” and “ trustworthiness ”. 21 although this may sound subtle, it carries important implications. seeking to maximise trust may be an unrealistic and, indeed, undesirable objective for society. in a world of risks and uncertainties, including about individuals ’ trustworthiness, people need sometimes to mistrust if they are to avoid bad choices. if the principle of caveat emptor – buyer beware – is to work effectively, not just in financial services but more broadly, it requires a constructively sceptical public. like cholesterol, there is such a thing as too much trust, as well as too little. a plausible objective of public policy, then, is not to maximise trust among consumers of financial services, but to maximise trustworthiness among its producers. yet the words “ corrupt ”, “ self - serving ” and “ greedy ” are hard to square with “ trustworthiness ”, as are opinion polls putting bankers at risk of relegation from the trust league table. opinion polls of