Over the past decade, UK average real earnings th  have fallen for the first time since the middle of the 19 century. Trust in the financial system has plummeted. 3  Over the past decade, the UK and its key G20 partners have been fixing these fault lines and creating a system that is safer, simpler and fairer. The system is safer because banks are now much more resilient, with capital requirements for the largest global banks that are ten times higher than before the crisis and a new leverage ratio that guards against risks that may seem low but prove not. The financial system is simpler. As banks have become less complex and more focused, they are lending more to households and businesses and less to each other. A series of measures are eliminating toxic and fragile forms of shadow banking while reinforcing the best of resilient market-based finance. And more durable market infrastructure is simplifying the previously complex – and dangerous – web of exposures in derivative markets. The financial system is fairer because of reforms that are ending the era of “too big to fail” banks and addressing the root causes of a torrent of misconduct. The benefits of these painstaking efforts are beginning to be realised. The global financial system is moving from fragility to resilience. The too-big-to-fail public subsidy enjoyed by private systemic banks has fallen by 90% in the UK. Credit is now growing in all major economies.
As the Vice Chair of the Supervisory Board of the Single Supervisory Mechanism recently stressed, for example, “both banks and supervisors must prepare for any potential scenario”. 12  12  ‘Introductory statement to the press conference on the ECB Annual Report on supervisory activities 2016’, remarks by Sabine Lautenschläger, Vice Chair of the Supervisory Board of the Single Supervisory Mechanism, 27 March 2017. 9  All speeches are available online at www.bankofengland.co.uk/speeches  9  Under one scenario, negotiations could result in a new statutory and regulatory regime with a large number of firms – currently either physically based in the UK or providing services within the single market via passporting arrangements – coming directly under PRA authorisation and supervision. In that case, we would need to form our own judgments, rather than relying exclusively on those of others. As our continental colleagues have observed in the analogous case of UK firms operating in Europe, these judgements could affect whether the firm operates as a branch or a subsidiary, as well as the range of services it can supply. Consistent with our current approach, and the PRA’s stance towards non-EEA branches, any judgements would reflect:   the cooperative and information sharing arrangements in place;    our confidence in the standards to which others are adhering; and    any assurances we have on arrangements to address circumstances when things go wrong.