We cannot justify having a banking system that depends on the use of public money to douse the fire when the crisis comes. And we also cannot allow conditions to exist where risks are taken on the basis that this backstop exists. “Too big” or “Too important to fail” are shorthand for institutions that exist in their chosen form as a result of underwriting with public money. I don’t believe that there is anything controversial about a statement that no industry can take on a form which is a consequence of such a massive potential, and of course recently actual, call on public money. The big issue is therefore what to do to correct the situation. There are three elements to the debate: regulation, structure and resolution. We can re-design and re-build the fire prevention systems in the existing landscape. This is the regulation element. At the heart of this is action on capital requirements, including a role for contingent capital and larger liquidity buffers. But we may also conclude that we want to prevent fires by having a different landscape of buildings – a town planning solution in which the structure of the industry is re-drawn. And in the past, cities were rebuilt with that objective in mind. This is the structure element. But, whichever combination of these courses we choose to take, we cannot guarantee that there will be no fires in the future, and we would be extremely foolish if we made that promise.
While the risk of increased trade protectionism seems to have abated somewhat, it remains a significant tail risk that could seriously injure global growth. Against this backdrop, a rising tide of populist backlash against globalisation is a wild card for the medium-term. These risks are not pre-destined. The world is in a better position than before to deal with these risks. Where we go from here hinges strongly on domestic policy responses in each of the major economies and the trade-offs they make today between the short-term and the long-term. 2/6  BIS central bankers' speeches  Asia’s medium-term prospects are good Lest we forget, many parts of the emerging market world have not seen a significant backlash against globalisation. And Asia stands out in that regard. Asia remains committed to openness, is positioned for sustained growth, and offers much promise to investors. Led by China and India, Asia will remain the fastest-growing region in the world. The IMF projects that Emerging and Developing Asia will grow by an average of 6.3% p.a. from now to 2022. The ASEAN1 economies are expected to grow by about 5% p.a., China by about 6% p.a., and India by 7-8% p.a. Three factors will drive investment opportunities in the region. First, a growing middle class and rapid urban migration. According to the ADB, by 2030, about 1 billion people across China, India and ASEAN will be in the middle-income bracket. This is more than a threefold increase from today, and presents significant potential for growth in private consumption.