The governor said that regulators around the world needed to remain vigilant and that any fragmentation of global standards to try and gain competitive advantage would be dangerous.
He said no one should engage in a “race to the bottom”.
“We have to think about not why things are going to go right, but what could go wrong,” he said.
“What could happen [for example] when we think about the changing relationship with the EU?
“Part of our job at the Bank of England is to think about what could go wrong in that circumstance and how do we prepare our banks, our financial system, so that it’s there regardless of the outcomes of the negotiations.
“There are risks around Brexit, for the financial sector.
“And here’s something that’s changed with the system from 10 years ago – we are absolutely upfront about those risks, our view of those risks.
“We have stressed test our banks against those risks to make sure they have enough of a safety net, both in terms of their own funds plus liquid funds, in case we had a no deal Brexit.”
He said when he thought of the major risks globally, China was at the top of the risk register.
“China is a great source for growth for the global economy, it’s an absolute economic miracle, lots of positives,” the governor said.
“At the same time, their financial sector has developed very rapidly, and it has made many of the same assumptions that were made in the run up to the last financial crisis.
“So there’s a big so-called shadow-banking sector in China, there’s a lot of lending that’s based on very good past-experience.
“But there’s so much lending that the quality has gone down quite substantially.
“The level of debt is enormous relative to the size of the economy.”