  11  In addition, the Prudential Regulation Authority has made clear that it expects firms to use a balance of both financial and non-financial factors (such as conduct metrics) when determining pay rewards and that financial metrics should be appropriately risk adjusted. Internationally, the Financial Stability Board is taking action to improve the alignment between remuneration and conduct risk  12  and (during 2017) will consult on:    Supplementary guidance on the use of compensation tools to address misconduct, and    Recommendations for consistent national reporting and collection of data on the use of compensation tools. 10  Documentation relating to remunerations rules can be found at: http://www.bankofengland.co.uk/pra/Pages/supervision/activities/remuneration.aspx 11 See the Bank of England Quarterly Bulletin 2015 Q4, Volume 55 No. 4, page 328, Chart 6. 12 See ‘Implementing the FSB Principles for Sound Compensation Practices and their Implementation Standards: Fourth Progress Report’ at http://www.fsb.org/wp-content/uploads/FSB-Fourth-progress-report-on-compensation-practices.pdf 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  Taken together, these reforms will further strengthen the alignment between risk and reward, and ensure greater accountability for risk management failings over a longer timeframe. Complementing “Hard Law” with “Soft Law”  The authorities can implement rules and regulations, but they can also play a broader role by promoting good behaviour. The Fixed Income, Currency and Commodity (FICC) markets are covered by a patchwork of poorly understood codes of conduct and market practices.

The exchange rate also affects inflationary pressure indirectly and usually with a long time lag, by its impact on the level of activity. A weaker krona entails, everything else being equal, greater demand for Swedish goods and services, which in turn leads to an increase in resource utilisation. The exchange rate can also affect inflation expectations indirectly. BIS Review 11/2006  1  I would now like to move on to inflation prospects and monetary policy. In the December Inflation Report, we made the assessment that international growth would be good this year and in the next few years but would slow down somewhat. New information prior to our January meeting suggested that development would be stronger than expected. This applied primarily to the euro area and Asia while the latest US statistics indicated that the trend was more or less in line with the assessment made in December. Overall, the international prospects for growth and thus the growth of the Swedish export market seemed slightly stronger in January than in December. In my view, this assessment still holds good. The assessment in December for the Swedish economy was that growth would increase this year but subsequently slow down slightly in the next few years. In January, according to revised GDP statistics, growth in Sweden was considerably stronger from the final quarter of 2004 onwards than indicated by the information available at the beginning of December. Several indicators of economic activity also suggested a stronger development than expected.