Further innovations are needed if the sector is to come to terms with the new business models that Andrew Bailey and others have mentioned today. For example, innovations in the way banks are organised that are consistent with orderly resolutions. Separately, and as noted in a number of panels today, asset managers also need to innovate to adapt to the new realities of market liquidity. The increase in the scale of the asset management sector since the crisis has been notable, as has been the emergence of investment funds that offer daily liquidity while investing in securities that only appear liquid. The Bank, the Financial Conduct Authority and the Financial Stability Board are keenly aware of these risks, and we are working to resolve them in an orderly manner. The area of market liquidity is one place where there may be duplicative regulations and scope for adjustment. Market participants should rest assured we have made adjustments in the past where we have gotten things wrong. We adjusted the liquidity coverage ratio. President Draghi noted the joint work between the Bank and the European Central Bank to change securitisation – an example of fixing something we had not gotten exactly right. We will continue to adjust our market operations. Let me move towards the conclusion of my conclusion. The point about reform and review being a continual effort came through in spades. David Kynaston noted that there have been four big bursts of reform in the last 150 years.
As Elizabeth Corley highlighted, there is a disconnect between how we in finance – and I include the public sector here – see the sector and how the general public sees the sector. Interestingly, that disconnect is much less prompted by questions over the health of our banks. Alex Brummer made this same point in terms of a sense of optimism around institutions. That is a good thing because a tremendous amount has been done over the past seven years in order to make banks much stronger. I will not go into all the details, but banks are indeed now beginning to adjust their business models. I’ll add a very clear message on behalf of those of us on the regulatory side to the bankers in the room and those watching from outside: there is no Basel IV. There is no other big wave of capital regulation coming. With the agreement on Total Loss Absorbency Capacity, the last pieces of the puzzle have been put in place. It is true that we do have to make some adjustments to risk weights; and there will always be things to iron out, but I repeat there is no big other prudential regulatory wave for the banking sector. As Andrew Bailey made clear in one of the break-out sessions I attended, the focus now is about greater certainty and adjusting business models to these new realities.