Mark Carney: Worthy of trust? Law, ethics and culture in banking

Remarks by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, at the Banking Standards Board Panel "Worthy of trust? Law, ethics and culture in banking", London, 21 March 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

It is a pleasure to host this Banking Standards Board event "Worthy of trust? Law, ethics and culture in banking" and to join this distinguished panel.

Over the past decade, banking has suffered twin crises of solvency and legitimacy.

The first is being addressed by comprehensive reforms. As a consequence, large banks are now stronger, more liquid, and more focused.

This immense progress has been overshadowed by a crisis of legitimacy. A series of scandals ranging from mis-selling to manipulation have undermined trust in banking, the financial system, and, to some degree, markets themselves.

Multiple factors contributed to a tide of ethical drift. Market standards were poorly understood, often ignored and lacked teeth. Too many participants neither felt responsible for the system nor recognised the full impact of their actions. Bad behaviour went unchecked, proliferated and eventually became the norm.

The economic consequences have been enormous. Global banks' misconduct costs have now reached over $320 billion - capital that could otherwise have supported up to $5 trillion of lending to households and businesses.