of geography on the geometry of finance, a dynamic we might call geofinance. with the revolution in regulation following the financial crisis coming to its end, and with changes to the geopolitical landscape looming large, i think that geofinance is likely to be the defining challenge of the next few years. the domestication of retail banking soon after the crisis i worked with the independent commission on banking ( icb ). part of our challenge was to reconcile the uk ’ s position as an international financial centre with stable banking in the uk. to be clear, i am not referring to any company with a similar name. all speeches are available online at www. bankofengland. co. uk / speeches embargo : not for release before 19 : 30 on wednesday 4 october 2017 we concluded that domestic retail banking should be structurally separated from global wholesale and investment banking. the distinction was not between a safe utility bank which would never fail and a racy casino bank which would never be saved. we have had plenty of experience of retail banks getting into trouble. both sides of the ring - fence would undertake economically valuable activity, both would take risks, but each would need to be resilient to these risks without relying on the other. i will not rehearse the full arguments here, but let me highlight one which has had less attention, which is about time - consistency. it is a plain fact that prudential regulators tend to ring - fence retail banking operations in a crisis – i have done it myself. retail is predominantly domestic by nature and its troubles are best managed by those who know it best. so it makes more sense to recognise that reality and get the structures right ex ante, than to try and do so in a tearing hurry just as a crisis hits. ring - fencing retail banking is geofinance in action – in a good way. it goes with the grain of how banks are resolved, reinforcing the continuity of services which are critical to the real economy. it is predictable, with a clear framework of rules. it is proportionate, applying only above a clear size threshold. and it is efficient, allowing wholesale and investment business to prosper at a safe distance from retail and sme customers. ring - fencing is a very substantial undertaking for the pra, the fca and the affected banks – but we are on track for implementation by 1 january 2019. stability begins at home once these reforms are up and running, the core deposit -

we find a solution to the “ too important to fail ” problem, the size of our banking system will remain too large for the uk taxpayer credibly to support in future. london is a natural home for an international banking system, with its language, time zone and, most important of all, a large and successful critical mass of banking and supporting activity. but it cannot be allowed to benefit from an unsustainable dependence on the uk taxpayer. to allow that would be unfair to millions of people, not here tonight, who are now bearing the costs of the financial crisis. it is precisely because we do want to be an international banking centre with assets a multiple of annual uk gdp that we have to find a solution to the “ too important to fail ” problem. a resilient banking system is in the collective interest of the financial services industry. a robust solution will surely involve a combination of limits on the leverage of individual financial institutions ( as envisaged in the basel iii agreement ), a resolution framework for allowing individual institutions, no matter how large, to fail, and a change in the structure of banking. i await with interest the final report from the independent commission on banking. the style of regulation will also change with the pra. process – more reporting, more regulators, more committees – does not lead to a safer banking system. one of the reasons for putting the pra inside a central bank is to integrate the work of the two institutions more closely. in particular, the market intelligence team at the bank will work closely with the supervisory body. i believe that we can operate prudential supervision at lower cost than hitherto by reducing the burden of routine data collection and focussing on the major risks to the system. it is vital that we collect and process data only where the supervisors have a need to know. targeted and focussed regulation, allowing senior supervisors to exercise their judgement, does not require ever - increasing resources. for example, we will reduce the number of people subject to the intensive regulatory interview process before appointment by limiting such interviews to the most senior people. and one of the benefits will, i hope, be to make entry into uk banking easier and so promote competition. let me return to the question of which aspect of financial regulation is most deserving of the adjective “ tragic ”. is it light touch regulation? no – it is the mistaken belief that by compromising on unduly low capital requirements and inadequate limits on leverage, regulators can compensate