Mark Carney: The European Union, monetary and financial stability, and the Bank of England Text of the Cairncross Lecture by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, St Peter’s College, Oxford, 21 October 2015. *  *  *  I would like to thank Ben Nelson and Iain de Weymarn for their assistance in preparing these remarks, and Aaron Clements-Partridge, Rashmi Harimohan, David Ronicle, Thomas Smith, James Talbot, Ryland Thomas, Nicola Anderson, Phil Evans, Richard Blows, George Murphy, Mike Flood, Peter Nagle, Nicola Shadbolt, Sinead Meany, Jumana Saleheen, Dennis Reinhardt, Bob Hills and Siobhan Clark for their work preparing EU Membership and the Bank of England. 1. Introduction  It is a great honour to give this Cairncross Lecture in Wren’s exquisite Sheldonian Theatre. Sir Alec Cairncross was a celebrated economist whose career bestrode public service and academia. Born to a Lanarkshire ironmonger in 1911, he rose, via Glasgow University and Cambridge, to serve as the first head of the Government Economic Service and later, much more illustriously of course, as Master of St Peter’s College. His work serves as a reminder of how enduring are the most trying economic questions we face. His PhD thesis, eventually published after great anticipation in 1953, concerned British investment at home and abroad during the last great wave of globalisation – a Golden Era for global commerce that stretched from Canadian Confederation to the eve of the Great War.
4.2  Financial stability  The impact of EU membership on financial stability is more challenging. Given the close integration of the UK financial sector with the rest of the EU, it is imperative that the EU has a robust regulatory framework. This is in the process of being achieved. Through its membership of the EU, the UK is promoting a strong global regulatory framework, and UK authorities have worked in close concert with our European partners to find solutions to the fault-lines of the past. Examples include moves to end Too Big To Fail by enhancing bank recovery and resolution, a solution developed locally at the Bank of England, implemented regionally in the European Union, and now agreed globally through the Financial Stability Board. Given the scale of the UK’s financial sector relative to its economy, the Bank of England also has a special responsibility to the UK, to Europe and the world. The UK must ensure that the  11  See Broadbent, B (2011), “Rebalancing and the real exchange rate”, Speech at Thompson Reuters, London. BIS central bankers’ speeches  7  system is robust to shocks and that financial institutions can be resolved in an orderly manner. After all, financial stability is a national responsibility, with the UK taxpayer serving as the ultimate backstop of the UK financial system. The comprehensive reform of the UK’s institutional framework for financial stability since the crisis creates a coherent architecture of national macroprudential and microprudential regulators and supervisors.