I am delighted to be here with colleagues from leading British investment banks and the London Stock Exchange: examples of UK financial institutions supporting the needs of global clients and delivering the type of open financial flows the global economy needs. Internationally the UK books more international banking business than anywhere else and over 40% of global foreign exchange and interest rate derivative business. We are also home to the second largest global asset management and fourth largest insurance centre. At the Bank of England, we want to support the financial sector to realise the full promise of new technology, so it is deployed safely and for the benefit of our people. We see our role as providing robust but dynamic regulation that is appropriate for emerging innovations. In June, we published a series of commitments setting out how the Bank could support the economy and the financial system of the future.1 We know that all of these action areas will benefit from collaboration with international partners and learning from international best practice. Today, I want to use this opportunity to explain what steps the Bank of England has taken in its approach to Fintech, and share a few lessons that we have learnt along the way. These lessons touch on the themes of openness and integration we have been discussing.
It is therefore important for our banks to continue the enhancement of the quality of the asset side of their balance sheets, bridging the gap with our European peers. European Banks are also facing emerging risks beyond the traditional business model risks I just mentioned. I will focus on the three I consider as the most prominent ones. The first one is the exposure to climate-related and environmental risks, which will be one of the main concerns for both supervisors and banks in the years to come. The transition to a green economy comes at a cost and this will affect the banks through various channels, the most prominent one being their exposure to businesses that produce high carbon emissions. It is therefore of paramount importance for banks to develop appropriate strategies and risk management practises to alleviate the longterm, direct and indirect, effects of climate change. From the regulatory perspective, we are conducting for the first time a climate related stress test for the Significant EU bank Institutions and we are also planning to carry out both on site and off site inspections to assess the readiness of the banks to deal with this type of risks. Let me be clear; both banks and supervisors are still on the learning curve with regard to climate-related and environmental risks. However, we both need to adapt and we need to adapt as soon as possible. The second emerging risk, is the IT and cybersecurity risk.