For risks that private financial institutions cannot self-solve, the UK Government is taking forward legislation that will allow UK households and businesses to access financial services provided by EU companies. Where joint action is required, we have been working with the European Central Bank. There has been considerable progress in the UK to address these risks, but only limited progress in the EU. Timely action by EU authorities is needed to mitigate risks to financial stability, particularly those associated with derivative contracts and the transfer of personal data. Throughout the Bank’s preparations for Brexit, we have been clear that we will maintain the traditions that have underpinned the UK position as a leading international financial centre. In particular, we will maintain current levels of resilience and our commitment to openness. V. CONCLUSION 800 years of economic history teaches us that financial crises occur roughly once a decade. A frequency that reflects in part the short institutional memories in finance. Our citizens have not forgotten the last crisis. Certainly not in the UK where average real incomes are still below pre-crisis levels. Or here in the US where confidence in banks remains near historic lows. The reforms of the past decade have put in place a new financial system that could, with time, regain people’s confidence. However, the challenge for policymakers is that, when it comes to financial stability, success is an orphan. As memories fade, complacency sets in and pressure to compromise re-emerges. We all bear heavy responsibilities to safeguard recent progress and address emerging vulnerabilities.
That conclusion is underscored by a look at existing attempts to build early-warning systems for various types of crisis. Either these systems miss out on crises that actually occur or they sound the alarm for crises that do not occur. Nevertheless, given the costs and the difficulties of managing the successive crises over the past decade, we must continue to devote considerable efforts to avoiding future crises and try hard to understand the kinds of vulnerability that lie behind them. The crises during the 1990s have revealed serious flaws not only in macroeconomic management but also, just as important, in the structure and regulation of the financial system in both debtor and creditor countries. The work now being carried out in various international fora is thorough and can be summarised under three headings: •  Crisis prevention, including the development of good practice standards and transparency codes, and incentives for both borrowers and lenders to act prudently. •  Crisis containment, including the establishment of official contingent lines and possible forms of private sector finance which may reduce the severity of any crisis. •  Crisis resolution, where the emphasis is on possible ways of creating a more orderly environment for restructuring external debt, on principles to guide the restructuring of banking systems in the wake of a crisis, and on handling corporate insolvency.