The new film The Big Short portrays the events that led to the sub‐prime crisis. While the crisis began in the US, the ensuing fallout tarnished investment banking’s reputation as a whole, including here in Europe.

The result is that a decade later there is still a lack of public trust surrounding investment banks, the products offered and the benefits they bring to the real economy. Is this justified? Has progress been made? Answering the following four questions will help us judge.

1. Are Europe’s banks safer than they were?

The short answer is: unequivocally yes. The European Commission’s financial reform programme has reduced the likelihood of bank failure. CRDIV, which implements the Basel III proposals in Europe, has provided a comprehensive set of reforms to improve banking regulation, supervision and risk management. Both capital and liquidity have increased in terms of quantity and quality, with equity capital held by banks at least ten times greater than it was at the time of the crisis, liquidity up around fourfold and leverage broadly halved.introduction of loss-absorbing capacity (TLAC and MREL).

Risks which arose through the interconnectedness of banks have been addressed through the central clearing of derivative trades and the imposition of additional capital buffers. The structure and power of supervisors has been reformed, stress tests and other macro prudential tools introduced, and the largest Eurozone banks placed under the watchful eye of the ECB via the Single Supervisory Mechanism. MiFID II will establish pre‐and post‐trade transparency rules to boost transparency in financial markets and broaden best execution standards for the buy side. While the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism ensure that troubled European banks can be wound up (or resolved) in an orderly way, without recourse to taxpayers.

However, this is not to say individual financial institutions are free from risk: as the landscape has changed, banks have been obliged to change too. The European banking industry is undergoing an intense phase of strategic change, as firms test out new business models. What was profitable before is often no longer a viable business. There is a welcome emphasis on identifying core activities, achieving sensible returns, and focusing on areas of long term competitive advantage.

But this is sometimes a double‐edged sword. For example capital charges have significantly reduced returns and lowered the attractions of many fixed income businesses, which have suffered lower liquidity as a result. And while new technology enables our members to promote efficiencies there is new competition, from fintech companies, and new risks, for example from cybercrime.

2. Do Europe’s banks need more regulation?

Right now more regulation is not the answer, but better regulation may be. We therefore welcome the Commission’s Cumulative Impact Assessment, which is the EU’s implicit acknowledgment that there should be a pause. The review will look at the overall impact of post‐crisis financial regulation. We hope this will help eliminate measures that threaten to throttle the real economy. In this context, I would include the unnecessary proposals to introduce Bank Structural Reform (BSR) and a Financial Transactions Tax, both measures which run counter to the growth agenda. Concern also remains over the Basel Committee continuing to push ahead with further regulatory change which will have to be adopted in Europe.

Instead of focusing on further reform when the effects of current legislation are uncertain, we should look to the role banking can play in economic growth. The industry has welcomed the Capital Markets Union (CMU) project. We now have a proactive agenda to promote financial markets as a key engine of growth and jobs for the real economy. By channelling much‐needed capital throughout Europe CMU can promote investment into Europe’s businesses and infrastructure, delivering much needed growth. This initiative has the potential to demonstrate the positive impact financial markets can play in wider society. Few would question the idea of a single integrated European capital market.

3. Is there a level playing field globally?

Greater consistency is still needed in applying regulation nationally across borders. Without doing so the benefits of projects such as CMU will simply not filter through to the real economy. International regulation is often implemented at the national level, creating opportunities for arbitrage and undermining Europe’s ability to compete. This contradicts the principles laid out by the G20 almost a decade ago: that a global crisis must be met with a global plan for reform and a level playing field. This needs to be overcome.

4. Is there unfinished business?

Media comment continues to show that, while we have moved on from the culture depicted in The Big Short, public trust in banking is still a long way from being re‐established. Culture and ethics are now at the heart of banks’ corporate governance, but change will take time, and has to percolate down through the whole bank. Management must visibly lead on ensuring that the tone from the top permeates through the bank.

Regulators in Europe and indeed across the world are putting in place new supervisory plans, new codes of conduct are being worked on such as the global FX code mentioned, and bankers in some jurisdictions are being made subject to increased personal accountability – examples being the UK Senior Managers and Certification Regime and the Dutch Disciplinary Regulations for Banks Board.

But the question remains as to whether enough progress has been made. Cultural change can be and is being inspired by these regulatory initiatives. But only the organisations themselves can undertake the necessary change from within. Banks are key cogs in the global economy and in order best to serve their clients, they have a duty to restore their credibility.