It contributed 11% of annual tax revenues or over £ billion per week in 2016. 1  1  Employment and tax data is from “Total tax contribution of UK financial services, Tenth edition”, City of London & PWC, November 2017. Lending data from Bank of England statistics and calculations. 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  Internationally, the UK is the pre-eminent financial centre. It accounts for 40% of global foreign exchange volumes and trades in over-the-counter interest rate derivatives. More international banking activity is booked here than anywhere else. The UK hosts the world’s second largest asset management and fourth largest insurance industry. The City is Europe’s investment banker, and it is leading the internationalisation of green, Islamic, renminbi and rupee finance. Being at the heart of the global financial system reinforces the ability of the rest of the UK economy, from manufacturing to the creative industries, to compete globally. And it broadens the investment opportunities and risk-adjusted returns for UK savers. This evening, I want to set out some of the ways the UK financial system can continue to serve the UK and the world in the face of major structural changes. II. Core attributes of UK leadership The City’s pre-eminence reflects lessons learnt over the centuries that an effective financial system must be resilient, fair and dynamic. Resilient so that it can finance households and businesses through good times and bad. A resilient system is anti-fragile – robust even to risks we do not anticipate.
17 The exact amount that can be provided will depend on a range of factors, including the type and amount of collateral, the currency composition of the lending and the concentration to individual counterparties. 18 See https://www.bankofengland.co.uk/-/media/boe/files/letter/2016/governor-apf-letter-040816.pdf. 10  All speeches are available online at www.bankofengland.co.uk/speeches  10  desire to have sufficient scope to cut Bank Rate materially – relative to the effective lower bound on Bank Rate of 0.5% at that time – if necessary to respond to adverse shocks. 19  Although the principles guiding the MPC’s choice of threshold still hold, with the lower bound on Bank Rate now permanently close to 0%, the MPC views that the level from which Bank Rate can be cut materially is now around 1.5%. Reflecting this, the MPC now intends not to reduce the stock of purchased assets until Bank Rate reaches around 1.5%. Any reductions in the stock of purchased assets will be conducted over a number of years at a gradual and predictable pace. The MPC continues to view sales and reinvestment decisions as equivalent from a monetary policy perspective. While any reduction will be solely a decision for the MPC based on meeting its objectives, the Bank will liaise with the Debt Management Office ahead of implementing any change in its asset purchase programme. As asset purchases unwind, decisions on Bank Rate will take into account any impact of changes in the stock of purchased assets on overall monetary conditions in order to achieve the inflation target.