Given the size and scale of the concentration of financial market activity in the UK, that is particularly true for the Bank of England. The events of eight years ago are receding into time. But I very much doubt that the generation of regulators that lived through the great financial crisis will revert to their pre-crisis tolerance and ignorance of systemic risk. And I very much hope that our successors do not forget those lessons either. The regulatory reforms now being implemented will not in practice prove perfect in every specific. There will be places where reforms aimed at one part of the financial sector will cut across changes made elsewhere. And where reforms have both an unintended and an undesirable effect greater than their benefits. The Bank has made very clear that we will look carefully at hard and clear evidence of such effects. Where justified we are prepared to adapt the reforms. In this respect, I would point to the changes we and the ECB have championed to the EU regulations on securitisations. And to the change the Financial Policy Committee recently announced to exclude reserves held by banks at the Bank of England from the application of the UK leverage ratio capital requirement. We will offset this elsewhere to ensure that the overall stringency of the capital requirement is not weakened. But while I can envisage that there might be specific and targeted change based on clear evidence, I do not envisage wholesale changes to the reforms.
For example, the market for derivatives encompasses more human capital (in the form of law experts writing contracts) than physical capital. Given the dominance of UK law, this would tend to encourage activity in London. Finally, regulatory changes may have played a role. London became the main trading centre for the Eurodollar market in the 1960s. The City went through a wave of deregulation in the 1980s and beginning of the 1990s which may have contributed to its position as a global financial centre. All of these drivers are likely to have played a part in concentrating financial market activity in London. And indeed they are likely to have been mutually reinforcing. The social license for financial markets  I have described at some length why concentrations of financial services develop and the economies of scale, lower costs and greater efficiency they should bring. In the case of financial markets and financial centres, however, one does have to ask the question, ‘for whose benefit’? Financial services exist, as we would all agree, to serve the real economy by channeling savings to investment, by providing insurance and by facilitating economic activity and trade.