We are not an island: how have the UK’s external balance sheet risks changed over the past two decades?

The last time a Bank of Canada governor spoke to the Canada-UK Chamber of Commerce it was 2018. My predecessor, Stephen Poloz, spoke to you about low global interest rates, the steady reduction of inflation risks and the successful conclusion of the North American trade negotiations. Brexit was in motion but not yet a reality. How the world has changed in just six years. The pandemic, Russia’s unprovoked invasion of Ukraine, and a global battle against inflation have altered the economic landscape. Concerns about national and economic security are changing trade, investment, and business decisions. Accelerating digitalization, particularly artificial intelligence (AI), is creating new competition for economic power. Geopolitical tensions are shifting economic relationships, and industrial policy is making a comeback. In my time with you today, I’ll talk about how trade is changi The pandemic, Russia’s unprovoked invasion of Ukraine, and a global battle against inflation have altered the economic landscape. Concerns about national and economic security are changing trade, investment, and business decisions. Accele post: BOC'S GOV. MACKLEM: THE COST OF GLOBAL GOODS MAY NOT FALL AS FAST AS GLOBALIZATION, AND THAT COULD PUT MORE UPWARD PRESSURE ON INFLATION. post: BOC'S MACKLEM: SEEMINGLY VAST POTENTIAL OF DIGITALIZATION SUGGESTS FUTURE GROWTH IN TRADE WILL TILT TO SERVICES || CANADA NEEDS TO BUILD BETTER TRADE RELATIONSHIPS AND PRODUCE THE PRODUCTS PEOPLE WANT TO BUY post: BOC'S MACKLEM: **WE HAVE TO FOCUS ON RISK MANAGEMENT, BALANCING UPSIDE RISKS TO INFLATION WITH DOWNSIDE RISKS TO ECONOMIC GROWTH **TRADE DISRUPTIONS MAY ALSO INCREASE THE VARIABILITY OF INFLATION **COST OF GLOBAL GOODS MAY NOT FALL AS FAST AS GLOBALIZATION, AND THAT COULD…

I took over as the Bank’s Deputy Governor for Financial Stability just under a year ago. Today I’ll step back to offer some remarks on how we think about financial stability and ...

Thank you for inviting me to speak today. Since I joined the Federal Reserve Board as Vice Chair for Supervision, I have spoken many times about the importance of bank capital to the safety and soundness of banks and the stability of the financial system. It is critical that banks have the capacity to continue lending to households and businesses through times of stress. Bank capital is a key component of this resilience. And bank capital rules help to ensure that banks are holding capital commensurate with the risks of their activities and the risks that they pose to the U.S. financial system. But capital has costs too. As compared to debt, capital is a more expensive source of funding to the bank. Thus, higher capital requirements can raise the cost of funding to a bank, and the bank can pass higher costs on to households, businesses, and clients engaged in a range of financial activities. These activities are critical to a well-functioning economy that works for everyone. That's why it is important to get the balance between resiliency and efficiency right. Today, I'll return to these themes in the context of two rules of great public interest: The Basel III endgame proposal and the proposal to adjust the capital surcharge for global systemically important banks (G-SIB). The path forward post: FED'S BARR: THE FED TO MAKE MATERIAL CHANGES TO BANK CAPITAL PROPOSALS. post: FED'S BARR: THE BASEL AND GSIB SURCHARGE RE-PROPOSALS WOULD TOGETHER INCREASE CAPITAL FOR GSIBS BY 9%, THE ORIGINAL PLAN HAD RAISED THEIR CAPITAL BY 19%. post: FED'S BARR: CHANGES TO BASEL RE-PROPOSAL WOULD EXEMPT BANKS UNDER $250 BLN IN ASSETS FROM MOST NEW REQUIREMENTS EXCEPT FOR RECOGNIZING UNREALIZED GAINS AND LOSSES OF SECURITIES.