is therefore an honour to celebrate with you the centenary of the events that really gave birth to it all. in my remarks today, i want to give a bank of england perspective on those events, to describe the services that we provide today, and to touch on some of the challenges and opportunities for the future. all speeches are available online at www. bankofengland. co. uk / speeches days past : correspondent banking at the bank of england in the years running up to 1917 our story centres around benjamin strong, the first head of the new york federal reserve, who took a long ‘ scouting trip ’ to europe in the spring of 1916 – little more than two years after the formation of the federal reserve system. the bank of england, of course, had been around somewhat longer – 222 years longer, to be precise. but for much of that period it had seen little need to establish banking arrangements with fellow central banks, sitting as it did astride the enormous global sterling area, with no major alternative currency in sight. the first account, for the bank of japan, wasn ’ t opened until 1896 – and only three more ( greece, australia and spain ) followed in the pre - war years. as the american banker willard straight acidly put it : ‘ the british idea of co - operation was that the other fellow does what the britisher wants him to do ’. world war 1 changed all that. the declaration of war in july 1914 precipitated a severe financial crisis as confidence in banks collapsed. to ensure that european allies and neutral countries retained access to london markets and had a safe place to deposit assets and the proceeds of their rapidly - increasing wartime borrowing, and pay for supplies, the bank of england opened ten accounts in the early part of the war ( for france, belgium, italy, serbia, romania, portugal, egypt, the netherlands, norway and switzerland ). the united states had the opposite problem. the war had led to a huge increase in the demand for us exports from europe, paid for by foreign assets, typically gold. these massive capital inflows risked driving excessive domestic us credit expansion, threatening inflation and undermining the fixed exchange rate between the dollar and gold, unless the excess could be recycled overseas. but the united states of the time lacked what strong termed the international ‘ banking machinery ’ needed to effect this recycling. and the sheer scale of capital movements risked overwhelming the traditional system of physical gold transfers, given the limited global supply of gold,

the revolution is over. long live the revolution! speech given by sam woods, deputy governor, prudential regulation and chief executive officer, prudential regulation authority at the city banquet, mansion house, london 26 october 2016 i am grateful to alex holmes, chris faint, kayleigh guinan, richard newman and the pra executive directors for their assistance in preparing this speech. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx my lord mayor, ladies and gentlemen let me begin by saying that it is a great privilege to be here tonight, and a great honour to lead the prudential regulation authority ( pra ) within the bank of england. tonight i am going to start with a word you don ’ t usually hear from a regulator. my theme is revolution. not a political revolution, but a prudential revolution, a revolution that has occupied your minds – and our speeches – since 2008. before i come onto that, lord mayor, i must point out that you have allowed a renowned and formidable revolutionary into our midst right here in mansion house tonight. what ’ s more, he is the chief executive of the financial conduct authority. now, it is true that andrew bailey doesn ’ t immediately make one think of che guevara. but andrew has been right at the forefront of the revolution in prudential regulation we have had here in the uk over the last 8 years. nobody has done more to rescue, repair and reform the uk financial system. andrew, it has been an absolute pleasure to serve as one of your guerrillas, and i very much look forward to working hand in glove with you in our new roles. for the 1, 580 banks, building societies, credit unions, insurers and major investment firms we supervise, there is a simple message about my approach to the role of running the pra. that approach is : more of the same. that means supervision which is firm but fair, using all of the latest analytical tools and techniques, together with a healthy dose of common sense. my job is to serve the public interest by focusing on the objectives given to us by parliament : promote safety and soundness, protect insurance policyholders, and – secondary to both – facilitate effective competition. these three objectives form a complete and coherent whole and i am absolutely committed to them. but they are easier said than delivered. so i am very proud of the effort my 1,