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Welcome to Downing Street. I would like to express to you my utmost gratitude for coming to this discussion today - academics, country officials, international and UK policy makers.
Over the last two years, the world experienced the most severe economic crisis seen in recent history. The financial sector was at the heart of this crisis and the existences of many banks across the world were threatened. Governments were forced to step in and use taxpayer money to prevent a complete financial meltdown and thus a much deeper crisis.
Going forward it is important that any costs that governments incur for interventions in the financial sector are distributed more fairly. There is clearly a strong rationale to charge for the externality caused by the financial sector and financial institutions should shoulder the responsibilities for losses they may face.
As you all know, work is being done at national and international levels to reduce the probability of failure. Numerous innovative ideas including contingent capital and systemic risk levies have recently emerged to increase the resilience of the financial system globally and to ensure that the costs of any future failures primarily fall to banks and bank investors rather than taxpayers.
Further discussions and considerations are required to develop these ideas fully. We need harmonisation of approaches globally and extensive international coordination to bring major benefits to the whole system.
Today's seminar is a useful tool to achieve these and we are specifically gathered here to exchange views on these ideas. Discussions of these sorts will provide the link to achieving an overall strategy that draws together ideas from various academics and international policy makers. Our discussions could also feed into international negotiations such as Basel. I want us to discuss how useful these ideas could be to strengthen the financial system across the world, how they could potentially be implemented and the extent to which they can be effective.
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