What a Difference a Decade Makes Mark Carney Governor of the Bank of England Chair of the Financial Stability Board  Remarks at the Institute of International Finance’s Washington Policy Summit, the Reagan Centre, Washington DC 20 April 2017  I am grateful to Alice Carr, Wayne Chapman, Carsten Jung and Iain de Weymarn for their assistance in preparing these remarks. 1  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  Introduction It’s a pleasure to be back at the IIF’s Washington Policy Summit. 1  Last time I spoke here (in 2011) it was still early in the international financial reform process. From the IIF’s perspective at the time, there were three major concerns: -  The consistency of implementation across the G20;  -  The possibility of significant regulatory arbitrage in shadow banking; and  -  Whether the FSB/G20’s ambitious agenda would impair the recovery. Today, those debates have largely been settled. First, the new international minimum standards are being, by and large, consistently and promptly implemented in G20 jurisdictions. This progress is regularly assessed and transparently reported by the FSB 2  and the IMF. And in general, when countries have deviated from international standards, it’s because they have chosen to go further. Second, activities which give rise to similar risks are being treated consistently regardless of where they originate. A series of measures have addressed the major regulatory arbitrage opportunities that encouraged shadow banking. Contingent exposures of banks have been brought on balance sheet and appropriately capitalised.

6  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  6  To address the “rolling bad apples” problem, mechanisms are now in place in the UK to ensure that when individuals move on their history will be known to those who consider hiring them. The FSB is now considering whether to adopt such an approach more broadly. UK authorities have used their convening powers to encourage market participants to establish standards of market practice that are well understood, widely followed and, crucially, that keep pace with market developments. That’s why the global FICC Market Standards Board is establishing readily understood standards for their markets. And it’s why global FX Committees will launch in May the first consistent code of conduct for FX markets. The best in the markets are codifying the best of markets. But codes are of little use if nobody reads, follows, or enforces them. This is where the UK’s Senior Managers Regime (SMR) for senior decision-makers of banks, building societies and major investment firms comes in. The SMR addresses the common refrain of senior management that they weren’t aware that misconduct was taking place in their firms. The SMR re-establishes the link between seniority and accountability. Senior Managers now must take reasonable steps (including training or proper oversight) to prevent or stop regulatory breaches in their areas of responsibility. Adoption is spreading. Some international firms are voluntarily adopting elements of the SMR’s certification requirements to strengthen their global operations. And the FSB is now reviewing the merits of such “responsibility mapping”.