historical financial crises in a sample of advanced economies, reported in brooke et. al. ( 2015 ), suggest that the average cost of a financial crisis has been 73 % of gdp, which translates to a cost of roughly £20, 000 per capita if a financial crisis had taken place in 2016. all speeches are available online at www. bankofengland. co. uk / speeches bank and property company share prices were consistent with a rise in unemployment to 7. 5 %, falls in residential and commercial property prices of 15 - 20 % and a cumulative 4 % reduction in gdp growth. but banks had been tested – in public – against a shock twice as severe as that. so confidence in the banking system was maintained. remarkably by past standards, banks ’ funding costs moved very little. we were able to do the opposite of what regulation had typically done in the past : we could release, rather than build, bank capital. banks didn ’ t need to rein in. and credit continued to flow. the system was able to serve in – what were at least perceived to be – bad times as well as good. now, it would have been easy in the aftermath of the crisis to swing the regulatory pendulum right the other way ; to demand that banks fund themselves with huge amounts of shareholders ’ equity. the system would certainly have been safer. there is a respectable academic case for very high levels of bank equity. and with past banking crises costing 75 % of annual gdp, an empirical base for it too. but two changes mean the baseline level of resilience does not need to be supercharged further. the first is the advent of legal regimes to resolve failing banks and the powers to effect that. we now have the powers to step in to recapitalise a failing bank using investors ’ – not taxpayers - funds. there is more to do to here. but as long as major banks continue building debt that can be bailed in and making the necessary structural changes, there is every prospect that bank failure in the future can be less damaging to the economy than in the past. the second change is our duty to keep regulation up with the risks the system faces. baseline standards do not need to be supercharged at all times for risk levels that prevail only some of the time. this, of course, makes it all the more important that levels of resilience keep up with the macro trends as they develop. the first and most obvious of those is brexit.

carlos da silva costa : ten years after the 2008 financial crisis – where are we heading now? keynote address by mr carlos da silva costa, governor of the bank of portugal, at the international finance and banking society conference 2018, porto business school, porto, 30 june 2018. * * * 1good morning ladies and gentlemen, it is a great pleasure to open this weekend ’ s conference, in which a wide variety of topics will be covered ranging from the more micro ones such as asset pricing to the broader issues related to financial stability and regulation. in the spirit of the conference ’ s title and against the background of the post - crisis financial sector reforms, in my remarks this morning i will ask you to ponder where we are heading and what needs to be addressed to mitigate persisting financial stability risks in the context of an incomplete architecture of the european union ( eu ). the european project as you know is a political endeavour that has involved waves of integration over the last few decades. each step determines the next, with the institutional set - up limited to what is required but without sufficient capacity to react to the unforeseen. in many cases the deepening of the integration process was motivated and steered through successive crises. some may argue the crises were often existential. despite renewed calls in recent years for the completion of the european architecture, starting with the completion of the banking union, the outcome of yesterday ’ s euro summit is a clear evidence of the hurdles we are facing. do we need another crisis to steer further integration? in advance of yesterday ’ s euro summit, the meseberg declaration 2 and the ministerial agreement 3 between france and germany was a welcome development as it was the first time in six years ( since 2012 ) that concrete steps forward were proposed by elected politicians. however, the meseberg declaration and yesterday ’ s euro summit, by falling short of delivering on further risk sharing while adding additional layers of risk reduction measures, lead us to consider whether the costs of attaining additional risk sharing are worth the risks to financial stability in the interim period. if not, what do we need to revisit and reassess to ensure it? during the crisis, governments had to resort to bailouts when banks that had become too big, complex and interconnected were at risk of failure. letting them fail would have meant that households and businesses would have been unable to access their money, finance their projects or make payments. as highlighted by tim geithner, “ by not imposing