Brexit  Nowhere has that been more obvious than Brexit. On June 24th 2016, we started contingency planning for a ‘no-deal’ Brexit. With our focus on making sure finance can serve the wider economy, our work has had two elements. First, checking that, whatever economic disruption arises as we leave the EU, major banks have the capacity to keep lending through it. We know from our stress tests that banks can withstand an economic scenario for the UK that is worse than the financial crisis. That stress test scenario encompasses even a Brexit scenario based on the very worst case – ‘disorderly’ – assumptions, including: severe disruption at the border, acute economic uncertainty and financial market instability, and sharp increases in inflation requiring interest rates to rise. On that basis, we’ve been able to judge the core of the UK banking system to be able to continue to serve through Brexit, whatever form Brexit takes. The second element of our work has been to ensure that households and businesses using services from EU financial companies can continue to draw on those services after Brexit. 70 branches of EEA banks operate in the UK and provide services to both EU and UK end users. UK households and businesses hold 16 million insurance policies with EU insurers.8 UK investors invest in funds based in the EU. And clearing houses based in the UK sit at the centre of EU and global derivatives markets, helping the financial system to manage and distribute risks.
Stress tests show major banks at the core of the system can now not just withstand recessions in the UK and world economies that are deeper than the financial crisis, they have the capacity to keep lending to households and businesses.6  This will serve the UK well in the next economic downturn, whatever causes it and whenever it comes. That’s the point of financial stability. It’s not for the benefit of finance. It’s for the benefit of the wider economy. Regulation of finance is a means, not an end. That’s why it would have been a mistake to pursue the ‘stability of the graveyard’. Easy though that may have been when the memory of the crisis was raw, and though it would have been beneficial in the bad times, it would have brought too great a cost at all other times. Our mandate means everything we do must cost the economy no more than the benefit it brings in the bad times. That explains why, for example, we haven’t gone as far as some would argue for in making banks bulletproof to all possible shocks, however extreme and implausible. When it comes to the resilience of the core financial system, the regulatory pendulum hasn’t been swung too far. It doesn’t need to be brought back. We’ve balanced the benefits of our actions with the costs. So it would be harmful to swing back from here.